Document Type

Article

Language

eng

Format of Original

10 p.

Publication Date

3-2002

Publisher

Elsevier

Source Publication

Journal of Macroeconomics

Source ISSN

0164-0704

Abstract

This paper examines the effect of four alternative measures of real money balances on production efficiency using annual panels of 10 developed and 10 developing countries. Using maximum likelihood, separate stochastic production frontiers are estimated, along with the parameters of an equation relating technical inefficiency to real money balances. The results for the sample of developed economies indicate that increases in real simple-sum M1, simple-sum M2, Divisia M1, and Divisia M2 enhance efficiency in the production sector. On the other hand, in the sample of developing nations, there is no evidence that real money balances reduce technical inefficiency.

Comments

Accepted version. Journal of Macroeconomics, Vol. 24, No. 1 (March 2002): 125-134. DOI. © 2002 Elsevier. Used with permission.

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