Money-velocity causality detection : Evidence from some developing countries

Abstract This paper is an attempt to test Friedman's hypothesis that the variability of money growth causes velocity to change. The Granger-causality method is applied to test this hypothesis using quarterly data from 1974.I to 1985.IV for seven developing countries—Indonesia, Nigeria, Qatar, Kuwait, Saudi Arabia, the United Arab Emirates and Venezuela. These countries are characterized by relatively narrow but expanding money markets.