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THE TESTING OF MONEY NEUTRALITY IN ECONOMIC GROWTH OF INDONESIA

Journal: Management and Economics Journal (MEC-J) (Vol.1, No. 1)

Publication Date:

Authors : ; ;

Page : 12-20

Keywords : M1; M2; Population; Capital; and Economic Growth;

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Abstract

This study aim is to test the money neutrality in a narrow sense (M1) and a broad sense (M2) to the growth of output (GDP) in Indonesia, both in short term and long term. This research uses quarterly time series data at 2010 - 2016 periods. The analysis tool used is Error Correction Model (ECM). The results show that short-term money supply (M1 and M2) affect on output growth. However, in the long term, only money circulation in a broad sense (M2) affects on output growth, which also means that money is not neutral because it affects the real sector (GDP).

Last modified: 2018-01-12 01:06:11