Testing the quantity theory of money in Greece: reply to Özmen

Abstract

Özmen (Applied Economics Letters, 10, 971–4, 2003) re-examines money exogeneity in Greece using data from Karfakis (Applied Economics, 34, 583–7, 2002) and claims, contrary to Karfakis, that money exogeneity is rejected. This reply demonstrates that money exogeneity is sensitive to lag length specification.

Acknowledgements

I would like to thank, without implicating, Demetrios Moschos for helpful comments and suggestions.

Notes

 In an application of ARDL approach to the US consumption data, Perasan and Pesaran (1997) excluded the current values of changes in real income and inflation from the EC model, since, as they argued, due to the high levels of cross-sectional and temporal aggregations involved, it was not possible to know a priori whether real income and inflation were the long run forcing variables for aggregate consumption.