Is There Long-Run Money Neutrality Under Different Exchange Rate Regimes?

Abstract

This paper tests the long-run money neutrality across different exchange rate regimes, empirically extending the concept of M. E. Fisher and J. J. Seater. Strong evidence shows the non-neutrality of two forms of money for the Hong Kong economy across the two regimes. While the Hong Kong M1 is marginally non-neutral under the float, it is clearly not neutral afterwards. The M2 is non-neutral both before and after the linked exchange rate. Copyright 2005 Blackwell Publishing Ltd