scholarly journals Money supply as an instrument of monetary policy and the promotion of economic growth

2021 ◽  
Vol 27 (7) ◽  
pp. 1540-1558
Author(s):  
Oksana N. AFANASYEVA
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Money Supply ◽  
Positive Impact ◽  
Economic Indicator ◽  
The United States ◽  
Mathematical Tool ◽  
Control Effect ◽  
Management Scenarios ◽  
The Impact

Subject. The article analyzes the influence of the money supply as an instrument of monetary policy impact on stimulating the economic growth, namely, the impact of instrumental indicators on the target economic indicator of GDP. Objectives. The paper makes an attempt to contribute to the discussion on the role of money supply as an instrument of monetary policy in achieving the economic growth. Methods. The study uses a new mathematical tool that takes into account the direct control effect of the instrument of monetary policy on the achievement of the target economic indicator. Results. I suggest three management scenarios in the impact of money supply on GDP: a change in the money supply with violations of the response to management in certain periods that determined the growth of GDP; the lack of response to control action; and a transition scenario, when a short-term positive impact is recorded from time to time, which, in fact, is close to the second scenario. Conclusions. The first scenario includes Russia, the United States and Brazil, in which the instrument of monetary policy (the money supply) determined the growth of GDP with individual periods of disruption of management; the second scenario includes Germany, Denmark, and Japan, with no response to the management impact; the third scenario is observed in China, Norway, and India. This conclusion enables to identify the specifics of the impact of the set of monetary policy instruments on economic growth, considering the J. Tinbergen’s theory of economic policy.

scholarly journals Impact of Monetary Policy on Economic Growth: Empirical Evidence in Vietnam

2019 ◽  
Vol 5 (10) ◽  
Author(s):  
Tang My Sang
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rates ◽  
Empirical Evidence ◽  
Money Supply ◽  
Negative Impact ◽  
Positive Impact ◽  
Secondary Data ◽  
The Impact

Through the secondary data collected from 2009 to 2018, the research used Var method to test the impact of monetary policy on economic growth in Vietnam. The results show that there is a relationship between the variables of monetary policy and economic growth, in which the money supply has a positive impact at a high significant level, interest rates have a negative impact on Vietnam economic growth. From the results obtained, the research proposed solutions for operating monetary policy.

scholarly journals The Effects of Money Supply and Interest Rates on Stock Prices, Evidence from Two Behavioral Experiments

2021 ◽  
Vol 8 (2) ◽  
pp. 33
Author(s):  
Christian A. Conrad
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Stock Market ◽  
Interest Rates ◽  
Money Supply ◽  
Stock Prices ◽  
Positive Impact ◽  
Real Economy ◽  
Behavioral Experiments ◽  
The Impact

What is the impact of interest rate and monetary policy on the stock market? Some studies find a positive impact of expansive monetary policy on stock prices others prove the opposite. This paper examines the effects of monetary expansion and interest rate changes on investment behavior on the stock market by illustrating two behavioral experiments with students. In our experiments the increase of money supply and the decrease of interest rates had a direct positive impact on share prices. These findings support the hypothesis that extreme expansive monetary policy with low, zero or negative interest rates encourage financial bubbles on the stock market. To avoid a crash the exit from such a policy must be slow. As happened in 1929, crashes can damage the financial system and the real economy. Central banks must take this into account in their monetary policy.

scholarly journals Impact of Money Supply on Sri Lankan Economy: An Econometric Analysis

2016 ◽  
Vol 67 ◽  
pp. 11-17 ◽  
Author(s):  
A.L.M. Aslam
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Money Supply ◽  
Serial Correlation ◽  
Positive Impact ◽  
Series Data ◽  
Sri Lankan ◽  
Independent Variables ◽  
Lm Test ◽  
The Impact

Economists argue that the money supply positively impact on economic growth of nations. In Sri Lankan context this statement was not tested econometrically. Therefore, the aim of this study was to scrutinize the impact of money supply on Sri Lankan economy. To exam this objective, this study considered the time series data from the period of 1959 to 2013 and used two types of variables such as dependent and independent variables. Here, the gross domestic product was considered as dependent variable, and Money supply, Exchange rate, Exports earnings, Imports outflow, the Colombo consumer price index were deemed as independent variables. In the meantime, the multivariate econometric method was used to test the impacts of money supply on economic growth of Sri Lanka. According to the analytical results, the money supply has kept positive impact on the economic growth of Sri Lanka at 1% significant level. The R-squared of the estimated model was 92% which was indicated that the estimated model was desirable. Meanwhile, the Durbin Watson test statistic was 2.43 and also the Breusch –Godfrey serial correlation LM test results was greater than 5%. Therefore, these statistics indicated that, the estimated model was not suffering from serial correlation.

scholarly journals Impact of Monetary Policy on GDP of India

2018 ◽  
Vol 5 (2) ◽  
Author(s):  
Om Prakash Agrawal ◽  
Prateek Kumar Bansal
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Gross Domestic Product ◽  
Growth And Development ◽  
Positive Impact ◽  
Economic Growth And Development ◽  
Credit Supply ◽  
Independent Variable ◽  
Tools And Techniques ◽  
The Impact

Monetary policy is a measure which is decided by the Apex bank to regulate currency supply and credit control in the Indian economy where as gross domestic product (GDP) is an indicator of growth and development of the economy. Monetary policy and its components i.e. CRR, SLR, BR, RR, RRR and MSF (Marginal Standing Facility) have impact on the inflation, credit supply in market and GDP of the country. The purpose of this study is to examine the impact of various financial components of monetary policy on the GDP, which is an index of economic growth and development of the economy. It has been observed during the study that monetary policy of the nation has positive impact on the GDP by applying the various tools and techniques with the help of Econometrics. In this study, GDP is used as dependent variable while components of monetary policy are used as independent variable to examine the impact.

scholarly journals Krisis Global dan Pertumbuhan Ekonomi di Indonesia

2021 ◽  
Vol 10 (1) ◽  
pp. 46-55
Author(s):  
Neli Aida ◽  
Fadeli Yusuf Afif ◽  
Tantri Siwi Peni
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Unit Root Test ◽  
The United States ◽  
Global Crisis ◽  
Correction Model ◽  
The Government ◽  
Short Time ◽  
The Impact

This study aims to analyze the impact of the global crisis that occurred in 2008 on economic growth, the trigger for the crisis, namely an increase in credit accumulation in a large amount and in a short time in the United States (US), this increase led to an increase in bad credit so that it was quite large in the world economy. Economic growth, the global crisis, investment, exports, and labor are variables that will be obtained from the Central Statistics Agency, the Investment Coordinating Board, and others. The result of the unit root test and cointegration shows that the Error Correction Model is the chosen model. The results showed that the global crisis had a significant and negative impact on economic growth in Indonesia, while exports, labor, and investment had a significant and positive impact. Therefore, the government must maintain the balance of the economy to prevent a crisis, as well as the need to encourage investment, exports, and human resources to encourage increased economic growth.  

scholarly journals THE RELATIONSHIP BETWEEN THE DEVELOPMENT OF THE FINANCIAL SECTOR AND THE ECONOMIC GROWTH IN THE REPUBLIC OF NORTH MACEDONIA

2021 ◽  
Author(s):  
Dashmir Saiti ◽  
◽  
Borce Trenovski ◽  
Keyword(s):  
Economic Growth ◽  
Economic Theory ◽  
Money Supply ◽  
Positive Impact ◽  
Demand Curve ◽  
Time Lag ◽  
Trade Openness ◽  
Financial Sector ◽  
Short Run ◽  
The Impact

According to economic theory, the money supply positively affects economic growth, especially in the short run. Additionally, for small and open economies, the openness of the economy plays a crucial role in economic growth. Therefore, the subject of this paper is the impact of the money supply, measured through the broad money aggregate (M3), and trade openness of the country on the economic growth in North Macedonia. M3 aggregate is taken as an indicator of the financial sector development, whereas on the other hand, the trade-to-GDP ratio is an indicator for the openness of the economy. The research is employing the Vector Autoregression (VAR) model, and quarterly data for the period 1995-2019 are used. As opposed to the economic theory, the results show the absence of a long-run relationship between GDP, broad money, and trade openness in North Macedonia for the observed period. Also, in the short run, M3 and trade openness have a significant positive impact on GDP. Additionally, there is no noticeable time gap in the above relationships. Namely, the impact of broad money and trade openness on GDP in North Macedonia is not much stronger after a significant time lag from the impact in the first year. This put into question the capability of the monetary policy as a tool of the broader macroeconomic policy to shift the aggregate demand curve upwards and boost economic activity.

scholarly journals The impact of infrastructure development on economic growth in sub-Saharan Africa with special focus on Ghana

2019 ◽  
Vol 24 (3) ◽  
pp. 253-273 ◽  
Author(s):  
De-Graft Owusu-Manu ◽  
Adam Braimah Jehuri ◽  
David John Edwards ◽  
Frank Boateng ◽  
George Asumadu
Keyword(s):  
Economic Growth ◽  
Significant Relationship ◽  
Positive Impact ◽  
The United States ◽  
Sub Saharan Africa ◽  
Infrastructure Development ◽  
Content Type ◽  
Generating Capacity ◽  
Short Run ◽  
The Impact

Purpose This paper aims to assess the impact of infrastructure development on Ghana’s economic growth. Design/methodology/approach Using data obtained from the World Bank’s World Development Indicators, the United States’ (US) International Energy Statistics and the Central Intelligence Agency’s (CIA) Factbooks from 1980 to 2016, an autoregressive distributed lag (ARDL) framework is used to determine the long- and short-run impact of the selected infrastructure stock and quality indices on Ghana’s economic growth. Findings Findings indicate a statistically significant relationship between infrastructure development and economic growth. Additionally, electricity-generating capacity is identified as the infrastructure stock index that has the greatest positive impact on Ghana’s economic growth. The study reveals that electricity-distribution loss has a significant negative effect over both long- and short-run periods. Research limitations/implications Commercial petroleum export from Ghana since 2010 has been a key contributor to economic growth. Although its aggregate effect is included in the annual GDP figures adopted for the study, the authors would have wished to assess its impact on GDP as an independent standard growth determinant. However, because of a lack of available data over this study period, petroleum exports could not be adopted as an independent standard growth determinant. Additionally, an aggregated index of infrastructure stock and quality could not be derived because of the small size of data available. Hence, this study did not assess its impact on Ghana’s economic growth. Practical implications The research provides pragmatic guidance to policymakers to focus their efforts on expanding electricity-generating capacity while simultaneously taking steps to curb electricity transmission and distribution losses. These two related actions offer the greatest positive impact on infrastructure development and, as a consequence, Ghana’s economic growth. Originality/value This paper represents the first attempt to empirically study the relationship between infrastructure development and Ghana’s economic growth. A key contribution to the existing body of knowledge includes strong evidence of a positive effect of infrastructure development upon Ghana’s economic growth. Results also reveal that the greatest positive impact on economic growth is derived from electricity-generation capacity. However, the study also uncovers a negative, but statistically significant, relationship between road and economic growth.

scholarly journals El impacto de la dolarización en el sistema económico: Caso Ecuador 2000- 2016

ECA Sinergia ◽  
2019 ◽  
Vol 10 (1) ◽  
pp. 38
Author(s):  
Jorge Calderón Salazar ◽  
Sandra Zambrano
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Positive Impact ◽  
Monetary System ◽  
Real Gdp ◽  
Palabras Clave ◽  
El Sistema ◽  
Macroeconomic Indicators ◽  
The Impact ◽  
The U.S

  La investigación se centró en estudiar el impacto de la dolarización en el sistema económico utilizando como instrumentos de estudio indicadores macroeconómicos de alta relevancia, mediante análisis de datos de serie de tiempo se exploraron los cambios en la inflación, el crecimiento del PIB, la oferta monetaria y la liquidez, por tal se deduce, en primer lugar, que una vez implementada la dolarización la inflación disminuyó, en segundo, el PIB real y nominal presentan estabilidad ya que ha tenido un crecimiento notable, tercero, la oferta monetaria M1 y la liquidez total M2 aumentaron, concluyendo que la dolarización generó un impacto positivo en la economía ecuatoriana sin embargo existen otros factores importantes que limitan el crecimiento económico de los últimos años como es la caída del petróleo, la apreciación del dólar, el desastre natural sucedido en el año 2016, la falta de inversión extranjera, entre otros.   Palabras clave: sistema monetarios, inflación, mercado financiero y maroeconomico.   ABSTRACT   Research focused on the study of the impact of adopting the U.S. dollar as the official currency of Ecuador on the economic system, using highly relevant macroeconomic indicators by analysis of data of time series. It was possible to explore the changes in inflation, GDP growth, money supply and liquidity. It follows that firstly that once dollarization has been implemented inflation has declined; secondly the real GDP and Nominal growth are stable since it has had a notable economic growth; thirdly, the money supply M1 and total liquidity M2 have increased, concluding that dollarization has had a positive impact on the Ecuadorian economy, however, there are other important factors that prevent economic growth in recent years as, among others, the fall of oil prize, the dollar appreciation, natural disaster which occurred in 2016, and the lack of foreign investment.   Key words: monetary system, inflation, financial market and maroeconomico.

scholarly journals A MONETARY ANALYSIS OF GHANA: EXAMINING THE IMPACT AND THE CAUSAL RELATIONSHIP BETWEEN MONETARY POLICY AND INFLATION IN GHANA

2020 ◽  
Vol 4 (1) ◽  
pp. 1-14
Author(s):  
Edmund Obeng Amaning ◽  
Ali Napari Seidu
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Causal Relationship ◽  
Money Supply ◽  
Time Series Data ◽  
Positive Impact ◽  
Negative Relationship ◽  
Theory And Practice ◽  
Series Data ◽  
The Impact

Purpose: The main objective of the study was to examine the impact and the causal relationship between monetary policy and inflation in Ghana.Methodology: Annual time series data spanning from 1985 to 2017 with Auto Regressive Distributed Lagged (ARDL) model were employed for the analysis.Findings: The outcome from the study shows that, monetary policy rate had insignificant negative relationship with inflation in both the short and the long run. Again, interest rate, domestic investment and money supply were found to have significant positive impact on inflation in both the long and the short run for a specific period chosen for the study.The causal relationship shows that monetary policy rate granger causes money supply within the period understudyUnique contribution to theory and practice: The study recommends that policy makers need to keenly consider the levels of money supply in Ghana so as to ensure a stable retail price levels. The Government of Ghana needs to evaluate the prevailing levels of retail prices and set the interest rates on the 91-day Treasury bills because they are majorly treated as risk free rate hence determines other interest rates and inflation levels in Ghana.

Impact of Economic Regulation through Monetary Policy: Impact Analysis of Monetary Policy Tools on Economic Stability in Uzbekistan

2017 ◽  
Vol 3 (1) ◽  
pp. 65-69 ◽  
Author(s):  
Umidjon Duskobilov
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Impact Analysis ◽  
Supply And Demand ◽  
Economic Regulation ◽  
Policy Tools ◽  
Financial Flows ◽  
The Impact

Monetary policy is an integral part of economic development strategy in any economy due to its significant impact on economic sustainability. It has been an effective tool for regulating the economy through several tools. Nowadays the use of monetary policy tools to manage economic growth processes is a common practice in all market economies by balancing money supply and demand in domestic markets, increasing the benefits from foreign trade by exchange rate and overall financial flows by monitoring inflation rate trends. However, most effective tools are refinancing rate, mandatory reserve requirements and sterilization operations, which have direct linkages to financial flows, money supply, inflation, and exchange rate. In this paper, the author examined the impact of monetary policy tools on economic regulation in Uzbekistan by analyzing the relationship between monetary policy tools and economic growth. Empiric analysis revealed that monetary policy tools influenced positively on economic growth with a long-term relationship.

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