Changing Financial Systems and the Relationship Between Money and Income in Ten Asian Countries

Abstract

The objectives of this paper is to investigate the long-run relationship between monetary aggregates and income in the era of financial innovations and deregulation in ten Asian developing economies using the cointegration approach. The results of this study suggest that money matter for monetary policy purposes in these countries. Moreover, there is potential role for Divisia monetary aggregates to be used as additional financial indicators for policy actions.