Guglielmo Maria Caporale
Money, credit and spending: Drawing causal inferences
Caporale, Guglielmo Maria; Howells, Peter
Authors
Peter Howells
Abstract
It is widely accepted that loans cause deposits. Hitherto, though, the empirical evidence has come from bivariate causality tests which we now know can give rise to invalid inference if either of the two variables is causally influenced by some third, omitted, variable. In this paper we have used tests developed by Toda and Yamamoto to investigate the possibility that earlier inferences were incorrect because of the omission of a third relevant variable, total transactions in this particular case. Including the third variable requires us to revise some of the earlier inferences reported here, Howells and Hussein (1998). The most striking result, however, is that while deposits appear to be caused by total transactions (which could have invalidated the fundamental inference that loans cause deposits) our tests show that even in the presence of a third variable, the core of the endogeneity thesis prevails. Loans do cause deposits.
Citation
Caporale, G. M., & Howells, P. (2001). Money, credit and spending: Drawing causal inferences. Scottish Journal of Political Economy, 48(5), 547-557. https://doi.org/10.1111/1467-9485.00214
Journal Article Type | Article |
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Publication Date | Jan 1, 2001 |
Journal | Scottish Journal of Political Economy |
Print ISSN | 0036-9292 |
Publisher | Wiley |
Peer Reviewed | Not Peer Reviewed |
Volume | 48 |
Issue | 5 |
Pages | 547-557 |
DOI | https://doi.org/10.1111/1467-9485.00214 |
Keywords | money, credit, spending |
Public URL | https://uwe-repository.worktribe.com/output/1084753 |
Publisher URL | http://dx.doi.org/10.1111/1467-9485.00214 |