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Jurnal Ekonomi Malaysia

33 1999 65 – 86

Financial Liberalization in ASEAN and the Fisher Hypothesis

Fakulti Ekonomi dan Pengurusan
Universiti PUlTa Malaysia
43400 UPM Serdang
Selangor Danl! Ehsan
Malaysia



Fakulti Ekonomi dan Pengurusan
Universiti PUlTa Malaysia
43400 UPM Serdang
Selangor Danl! Ehsan
Malaysia


Abstract

This study examines the long-run relationship between inflation and nominal interest rates 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 imerest 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.

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Law, , Tan, , & baharumshah, (1999). Financial Liberalization in ASEAN and the Fisher Hypothesis. Jurnal Ekonomi Malaysia, 33, 65–86.

@article{law1999financial,
  title={Financial Liberalization in ASEAN and the Fisher Hypothesis},
  author={Law, Siong Hook and Tan, Hui and baharumshah, ahmad},
  journal={Jurnal Ekonomi Malaysia},
  volume={33},
  number={},
  pages={65—86},
 

year={1999},
}

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