scholarly journals An Empirical Investigation Between Money Supply, Inflation, Capital Expenditure and Economic Growth in Nepal

2021 ◽  
Vol 3 (1) ◽  
pp. 23-39
Author(s):  
Tilak Singh Mahara
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Capital Expenditure ◽  
Policy Instruments ◽  
Long Run ◽  
Ardl Approach ◽  
Ministry Of Finance ◽  
Sustainable Economic Growth ◽  
Bound Test ◽  
The Relationship

Background: Money supply, inflation, and capital expenditure along with others are major issues of consideration for policymakers in developing countries given the need to spark internal demand and to encounter the government’s massive fiscal obligations to alleviate poverty and achieve sustainable economic growth. Like other economies, the economic performance of Nepal is also based on these macroeconomic variables.  Objective: The principal objective of the study is to explore the association between money supply, inflation, capital expenditure, and economic growth in Nepal. Method: The study applies the ARDL approach to co-integration to check the relationship between selected variables. The bound test is carried out to see the relationship between variables. Result: The empirical findings of the study show that there is a significant long-run positive relationship between money supply, capital expenditure, and growth. There is a unidirectional causation from money supply and capital expenditure to real economic growth in Nepal. Conclusion: The study concludes that an increase in money supply, capital expenditure, and controlling inflation help to increase the long-run real economic growth of Nepal. Nepal Rastra Bank has to emphasize monetary policy instruments that help to increase the money supply in the long run and the Ministry of Finance (MoF) should be encouraged to increase spending on capital overheads to broaden and enhance the growth of the economy.

Money Supply-Economic Growth Nexus: Evidence from a Landlocked Country

2020 ◽  
Vol 2 (1) ◽  
pp. 106-115
Author(s):  
Tilak Singh Mahara
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Correction Term ◽  
Policy Instruments ◽  
Special Role ◽  
Real Gdp ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Impact

Background: There is special role of money in the economy due to its astonishing importance as change in the amount of it can have a significant effect on the major macroeconomic variables. Money supply is generally considered as policy-determined phenomenon. Like in all the nations, macroeconomic stability of Nepal also depends on the variation in the quantity of money. Objective: The principle objective of the study is to examine the impact of money supply on the economic growth of Nepal. Methodology: This study applies the ARDL approach to cointegration. Bounds test (F-version) has been carried out to determine the existence of long-run relationship between variables. Results: The empirical results pointed out that there is positive and significant long-term relationship between money supply and real economic growth in Nepal. Causality result reveals that there is unidirectional causality from money supply (M2) to Real GDP. The error correction term is found negative and statistically significant suggesting a correction of short-run disequilibrium within two and a half years. Conclusions: The study concludes that increase in the money supply helps to increase the real economic growth in Nepal. So, money supply and real GDP are associated in the long-run.  Implications: The implication of the study is that, real economic growth in Nepal can be achieved if Nepal Rastra Bank emphasized on monetary policy instruments which help to increase the flow of money supply both in the short and long run.

scholarly journals An econometric analysis of the effectiveness of fiscal and monetary policies in India

2021 ◽  
Author(s):  
Anand Nadar
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Fiscal Policy ◽  
Money Supply ◽  
Series Data ◽  
Monetary Policies ◽  
Indian Economy ◽  
Long Run ◽  
Short Run ◽  
Bound Test

This study investigatesthe effectiveness of fiscal policy and monetary policy in India. We collected thetime series data for India ranging from 1960 to 2019 from World Development Indicator (WDI). Weapplied the bound test co-integration approach to check the long-run relationship between fiscalpolicy, monetary policy, and economic growth in the context of Indian economy. The short-run andlong-run effects of fiscal policy and monetary policy have been estimated using ARDL models. Theresults showed that there is a long-run relationship between fiscal and monetary policies witheconomic growth. The estimated short-run coefficients indicated that a few immediate short runimpacts of fiscal and monetary policies are insignificant. However, the short-run impacts becomesignificant as time passes. The long-run results suggested that the long-run impact of both fiscal andmonetary policies on economic growth are positive and significant. More specifically, the GDP levelincreases if the money supply and government expenditure increase (Expansionary fiscal andmonetary policies). On the other hand, the GDP level decreasesif the money supply and governmentexpenditure decrease (contractionary fiscal and monetary policies). Therefore, this studyrecommends to use expansionary policies to spur the Indian economy.

scholarly journals Stock Market Development and Economic Growth in Malaysia: A Revisit from 1982 to 2014

2020 ◽  
Vol 2 (1) ◽  
Author(s):  
Lee Kok Fong ◽  
◽  
Mori Kogid ◽  
Jaratin Lily ◽  
◽  
...  
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Annual Data ◽  
Stock Market Development ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Financial Decision ◽  
Stationarity Test ◽  
Bound Test ◽  
The Relationship

The study examines the relationship between the development of the stock market and economic growth in Malaysia using annual data from 1982 to 2014. The development of the stock market represented three indicators, namely the turnover ratio, the shares value traded ratio and the market capitalization ratio. Augmented Dickey-Fuller stationarity test was carried outprior to the use of a bound test approach for co-integration and causality testing. The findings of the co-integration analysis showed that there is evidence of a long-run relationshipbetween economic growth andthe development of the stock market. Further examination of the causal relationship showed proof of the short-runinteraction between economic growth andthe development of the stock market. These findings may be of importance to policymakers in formulating growth policy and financial decision-making by investors.

scholarly journals Money Supply, Inflation and Economic Growth: Co-Integration and Causality Analysis

2020 ◽  
Vol 65 (2) ◽  
pp. 29-45
Author(s):  
Ayad Hicham
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Structural Breaks ◽  
Inflation Rate ◽  
Causality Analysis ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
The Relationship ◽  
Natural Series

AbstractThe aim of this paper is to examine the relationship between money supply, inflation rate, and economic growth in the context of Algeria, using various econometric procedures as co-integration without and with structural breaks in addition to three different ways of causality test for the period 1970-2018, the results confirm the long-run relationship between the variables with more than three structural breaks, but with the absence of the effects of money supply and inflation rate on economic growth both in short run and long run terms, on the other hand, the causality results confirmed the existence of hidden causalities among the variables running from the cumulative components not from the natural series, and all the results support the Monetarist view of inflation though the absence of any effect of money supply on economic growth.

scholarly journals Money supply and economic growth of Nepal: ARDL approach

2020 ◽  
Vol 4 (1) ◽  
pp. 76-94
Author(s):  
Keshar Bahadur Kunwar
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Money Supply ◽  
Time Series Data ◽  
Empirical Relationship ◽  
Domestic Product ◽  
Series Data ◽  
P Value ◽  
Long Run ◽  
The Relationship

There are a number of theories illustrating the relationship between money supply and gross domestic product. Money supply can be defined as the total stock of money circulating in the economy. The circulating money involves the currency, printed notes, money in the deposit accounts, and in the form of other liquid assets. Valuation of money supply helps analysts and policy makers to frame the policy or to alter the existing policy of increasing or reducing the supply of money. The valuation is important as it ultimately affects the business cycle and thereby affecting the economy. This study sought to provide answers to the question, what are the effects of money supply on the gross domestic product in Nepal? The study undertook a causal research design using time series data from the period 1974/75 to 2017/18 to critically investigate the relationship between money supply and economic growth by establishing an empirical relationship that exists between them. The study employed the Augmented Diky fuller test and ARDL- VECM model. The results indicate the existence of a significant long-run relationship between money supply and economic growth as measured by GDP. LNBM is significant to LNGDP and LNGDP is also significant to LNBM so there is bi-directional causality. There is unidirectional relationship existing between LNINF to LNGDP and LNINF to LNBM. ECTcoefficient vale are negative and the p-value of above three approaches are also less than 5 percent which is desirable for the ARDL model.

scholarly journals Research on Relationship between Financial Inclusion and Economic Growth of Rwanda: Evidence from Commercial Banks with ARDL Approach

2018 ◽  
Vol 4 (1) ◽  
pp. 7-18 ◽  
Author(s):  
Moïse Bigirimana ◽  
Xu Hongyi
Keyword(s):  
Economic Growth ◽  
Commercial Banks ◽  
Financial Inclusion ◽  
Annual Data ◽  
New Approach ◽  
Long Run ◽  
Ardl Approach ◽  
The Relationship

This study examines the relationship between financial inclusion and economic growth of Rwanda using annual data from 2004 to 2016. We used ARDL as it is a new approach to the problem of testing the existence of a level relationship between a dependent variable and a set of regressors, when it is not known with certainty whether the underlying regressors are trend- or first-difference stationary as developed by Pesaran. The results of our study revealed that there is long-run relationship between financial inclusion and economic growth of Rwanda.

scholarly journals An Empirical Study on Monetary Policy and Economic Growth: The case of Indonesia using an ARDL – ECM Approach

2021 ◽  
Vol 58 (1) ◽  
pp. 5908-5922
Author(s):  
Samoon Safiullah Et al.
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Money Supply ◽  
Unit Root Test ◽  
Policy Instruments ◽  
Distributed Lag ◽  
Integration Approach ◽  
Stationary Analysis ◽  
Long Run ◽  
Augmented Dickey Fuller

This study explores the role of monetary policy instruments, particularly through the board money supply and inflation, in support of economic growth in Indonesia. The research base on the long-run co-integration approach using the data from 1970 to 2019. The goal of this study complies with applying the Autoregressive Distributed Lag (ARDL), and Error Correction Model (ECM), for finding out the long-run co-integration approach among dependents and independent variables. The research includes the Augmented Dickey-Fuller (ADF) unit root test for stationary analysis. The ECM results show that inflation plays a significant but negative role in economic growth in Indonesia. On the other hand, the money supply has also inversely related to the country's economic growth but not significant

scholarly journals The Relationship between Money Supply, Price Level and Economic Growth In Pakistan: Keynesian versus Monetarist View

2018 ◽  
Vol 11 (2) ◽  
pp. 49-64
Author(s):  
Abdul Mansoor ◽  
Quratulain Shoukat ◽  
Shagufta Bibi ◽  
Khushbakht Iqbal ◽  
Romana Saeed ◽  
...  
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Price Level ◽  
Economic Policies ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship ◽  
Supply Price

AbstractThe objective of the study is to examine the relationship between money supply, price level and economic growth in the context of Pakistan by using Autoregressive Distributed Lag (ARDL) model, covered a period of 1980 to 2016. The results confirm the long-run relationship between the variables while using broad money supply as a response variable. However, in the price and income modeling, the variables do not support the cointegration relationship between the variables. The causality results confirmed the unidirectional relationship running from income to money supply, which implies that income do causes money supply in the short run, whereas money supply leads to inflation to support Monetarist view of inflation in a country. The results conclude that economic growth is imperative to stabilize money supply and price level through sound economic policies in a country.

scholarly journals Stock Market Development and Economic Growth: Empirical Evidence From an Institutional Impaired Economy

2020 ◽  
Vol 11 (5) ◽  
pp. 496
Author(s):  
Maku Affor Owen
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Sustainable Growth ◽  
Market Development ◽  
Stock Market Development ◽  
Test Methodology ◽  
Long Run ◽  
Stock Market Performance ◽  
Bound Test ◽  
The Relationship

The research investigated the relationship linking stock market development and economic growth from 1985 to 2018. In measuring growth, Gross domestic product (GDP) was adopted, while stock market was surrogated by turnover ratio, market-capitalization, and value of share- traded, sourced from the Central Bank of Nigeria (CBN) and the Security and Exchange Commission Database. The inclusion of money supply (M3) captured innovation (financial) in the monetary sector. In investigating the aforementioned relationship, the ARDL Bound test methodology was adopted. Empirical results from the investigation confirm the existence of a long-run relationship between stock market development and growth. Similarly, there was a positive relationship between indices of stock market development and growth, albeit statistically insignificant. The study concluded that financial institutions should concentrate on financial innovation in other dimensions in other to boost stock market performance that will result in sustainable growth.

scholarly journals PENGARUH INDEKS PERSEPSI KORUPSI, KEBIJAKAN MONETER DAN FISKAL TERHADAP FUNDAMENTAL EKONOMI MAKRO DI INDONESIA

Media Ekonomi ◽  
2015 ◽  
Vol 23 (2) ◽  
pp. 121
Author(s):  
Fira Elfrida ◽  
Dian Oktaviani
Keyword(s):  
Economic Growth ◽  
Dynamic Models ◽  
Capital Expenditure ◽  
Policy Instruments ◽  
Fiscal Policies ◽  
Short Term ◽  
Corruption Perception Index ◽  
Long Run ◽  
Corruption Perception

<em>The purpose of this study is to examine the effect of the Corruption Perception Index (CPI), monetary and fiscal policies on macroeconomic fundamentals in Indonesia with the period 2005 - 2013. The variables used in this study include economic growth and inflation as dependent variables, Corruption Perception Index (GPA), BI Rate, statutory reserve requirements, tax revenues, subsidies, capital expenditure and goods expenditure as unbounded (free) variables. The analysis method used is the Error Correction Model (ECM) approach by estimating the static and dynamic models to determine the long-term balance and short-term balance. The results of this study indicate that in the short-term economic growth is significantly influenced by tax and subsidy revenues which are part of the fiscal policy component, while in the long run are significantly influenced by the BI Rate and minimum statutory demand deposits which are monetary policy instruments. And in the short run inflation is significantly influenced by the BI Rate, while in the long term the Corruption Perception Index (CPI), monetary and fiscal policies do not significantly affect inflation</em>

Sign in / Sign up

Export Citation Format

Share Document