Causality Between Moneyand Income

R. W. Hafer used the Granger test to find out the nature of causality between GNP (rather than GDP) and M for the United States for the period 1960-I to 1980-IV. Instead of using the gross values of these variables, he used their growth rates, GNP and M, and used four lags of each variable in the two regressions given previously. The results were as follows58: The null hypothesis in each case is that the variable under consideration does not "Granger-cause" the other variable.

Direction of causality

F value

Decision

M ^ GNP

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Rules Of The Rich And Wealthy

Rules Of The Rich And Wealthy

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