A Multivariate Long-Run Money Neutrality Investigation: Empirical Evidence for CAMEU

We examine the long run neutrality of money, in Central Africa Monetary and Economic Union (CAMEU) economies applying the multivariate methodology of King and Watson, using M2 and real output during the period 1970-2008. Tests consistently reject the long run money neutrality hypothesis. It is found that M2 has significant and positive impacts on real output of all CAMEU countries except for Gabon. The results are robust under other monetary aggregate variables and various sub-periods. In addition, the estimated coefficients are stable under two breakpoints corresponding to the dates of central bank reforms and devaluation of the local currency.