Tests of the different variants of the monetary model in a developing economy: Malaysian experience in the pre- and post-crisis periods
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This study examines the validity of four different variants of the monetary model of exchange rate determination for Malaysia covering both the preand post-crisis periods using the vector error-correction models. The findings demonstrate that for both periods, the variables used are cointegrated. Tests tend to suggest that of the four variants of monetary model, the sticky-price model holds in both periods and the flexible-price model holds only in the post-crisis period. The proportionality between the exchange rate and relative money does not hold in any period. The plotted actual and fitted exchange rates for both sub-samples show that the models are able to track the actual exchange rate trend quiet well.
Economics , Monetary model
Lee, C., Mohamed, A., & Mohammed Masih, A M. (2009). Tests of the different variants of the monetary model in a developing economy: Malaysian experience in the pre- and post-crisis periods. Applied Economics, 41(15), pp. 1893-1902. https://doi.org/10.1080/00036840601131797