The Hypothesis of Neutrality of Money: Panel Data Analysis

In the present study, it was examined if the hypothesis of neutrality of money applies to Turkey and the member countries of Shanghai Cooperation Organization. For this purpose, the data obtained for the period between 2000 and 2016 were examined using panel data analyses. Economic growth was used as dependent variable, whereas the annual growth rate of monetary supply as used as independent variable. Within the context of analysis, firstly the horizontal cross-sectional dependence tests were implemented. Then, according to the results of tests, the CADF unit root test was applied. Since the variables are stationary at various levels, the cointegration test was implemented. The results of Durbin-Hausmann Cointegration Test showed that there was no cointegration relationship for the groups but there was a cointegration relationship in the panel. In this case, the hypothesis of neutrality of money does not apply to the current panel. In the present study, Dumitrescu-Hurlin Panel Causality Test was applied finally, and it was revealed that there was a causality relationship between the money supply and outpu