Ibrahim, Mansor H. <br/><br/>
Money, exchange rate and inflationary dynamics in Malaysia: a post forecast evaluation 

 -  1999 
 - p.69-85 
 - Dec 
<br/><br/> The paper examines the inflationary dynamics of Malaysia by considering the roles that may be played by money supply growth and exchange rate changes using both within-sample and post-sample performance evaluations. Consistent with existing studies, our within-sample results indicate that the growth rates of money and, to some extent, changes in the exchange rate are causally linked to inflation. However, when we employ out-of-sample measures, we find that the causal models with money and/or the exchange rate perform worse than a time-series model in anticipating future inflation rates. The results may be due to the breakdown in the empirical relationships between money, the exchange rate and the prices, on which we verify using the Chow test. Relatedly, the models may also suffer from misspecification. Accordingly, basing policy recommendations for inflation stabilization solely on monetary aggregates or the exchange rate are likely to be misleading. - Reproduced 
<br/><br/><label>Subjects--Topical Terms: </label><br/>Inflation - Malaysia<br/>Money - Malaysia<br/>Exchange rates - Malaysia<br/>Exchange rates