Financial Liberalization and the Information Content of Money in Indonesia, Korea, and the Philippines

Author/Editor:

A. Javier Hamann

Publication Date:

November 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Using a VAR approach, this paper studies the relationship between money, output, and prices in a group of Pacific Basin countries that underwent financial sector reform during the 1980s: Indonesia, Korea, and the Philippines. Special attention is paid to assessing the information content of money. Money was found to contain valuable advance information on output and prices in Korea, on prices only in the Philippines, and did not contain any advance information in Indonesia. The introduction of financial sector reform was not found to lead to a structural break in the price and output equations; however, the information content of money was affected. Further tests show that exchange and interest rates—variables that gained flexibility with the reforms—contain valuable information about future developments in prices in Korea and the Philippines.

Series:

Working Paper No. 93/88

Subject:

English

Publication Date:

November 1, 1993

ISBN/ISSN:

9781451851083/1018-5941

Stock No:

WPIEA0881993

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

44

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