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

November 1, 1993

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A. J Hamann Financial Liberalization and the Information Content of Money in Indonesia, Korea, and the Philippines, (USA: International Monetary Fund, 1993) accessed September 19, 2024

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.

Subject: Currencies, Exchange rates, Financial regulation and supervision, Financial sector reform, Foreign exchange, Monetary aggregates, Monetary base, Money

Keywords: Currencies, Equation, Equations in Korea, Exchange rates, Financial sector reform, M2, Monetary aggregates, Monetary base, Money variable, Money-output-price relationship, Output equation, Philippines money, Price, Price equation, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/088
Stock No:

WPIEA0881993
ISBN:

9781451851083
ISSN:

1018-5941

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