Financial liberalization in ASEAN and the fisher hypothesis

Hook Law, Siong and Boon Tan, Hui and Ahmad Zubaidi Baharumshah, (1999) Financial liberalization in ASEAN and the fisher hypothesis. Jurnal Ekonomi Malaysia, 33 . ISSN 0127-1962

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This study examines the long-run relationship between inflation and nominal interest raes in the 1990s by utilizing the Johansen-Juselius multivariate cointegration technique. The evidence supports the tax-adjusted form of Fisher hypothesis for three ASEAN countries, namely Singapore, Malaysia and Thailand. Thus, the assumption of a stable real interest rate appears to have empirical support for these low-inflation economies. We also demonstrate that inflation rate is both weakly and strongly exogenous in these three systems. However, the weak form of the hypothesis is decisively rejected for the inflation prone countries like the Philippines and Indonesia. In general, our results suggest that in a deregulated environments real interest rate is insulated from nominal shocks and money is neutral

Item Type:Article
Journal:Jurnal Ekonomi Malaysia
ID Code:1357
Deposited By: mr Mustaffa Abu Bakar
Deposited On:18 May 2011 03:33
Last Modified:22 Sep 2011 01:41

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