Inflation, Money, and Real GDP in Mexico: A Causality Analysis
Document Type
Article
Publication Date
3-15-2004
Description
The relation between inflation, M1 money, and real GDP in Mexico is examined using annual data from 1944 to 1991. When investigating the relation between changes in inflation and real GDP growth it is found that it is important to separate the changes in inflation into predictable and unpredictable components. Predictable increases in differenced inflation are found to have a significant, negative effect on real GDP growth. Unpredictable increases in differenced inflation are found to have a significant, positive effect on real GDP growth. In contrast, changes in M1 growth fail to Granger-cause real GDP growth even when the changes in money growth are divided into predictable and unpredictable components.
Citation Information
Shelley, Gary L.; and Wallace, Frederick H.. 2004. Inflation, Money, and Real GDP in Mexico: A Causality Analysis. Applied Economics Letters. Vol.11(4). 223-225. https://doi.org/10.1080/1350485042000193834 ISSN: 1350-4851