scholarly journals THE IMPACT OF MONETARY POLICY ON THE ECONOMIC GROWTH OF KUWAIT FOR THE PERIOD OF 1980-2020

2021 ◽  
Vol 3 (9) ◽  
pp. 01-14
Author(s):  
Nor Asmat Ismail
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Price Index ◽  
Consumer Price Index ◽  
Policy Instruments ◽  
Real Gdp ◽  
The Government

The government of Kuwait has shifted its focus from the dependence on oil and has concentrated on applying a long-term strategic vision that seeks to recover the economy and raise the citizens’ standard of living. To accomplish these objectives, monetary policy should be formulated appropriately by the government. However, it seems that the effects of monetary policy instruments on the economic growth of Kuwait are not obvious. Therefore, the main purpose of this study is to empirically explore the effect of monetary policy on Kuwaiti economic growth. This research uses annual time series data on real GDP, exchange rate, broad money supply (M2), consumer price index, and deposit interest rate over the period (1980 - 2020) and applies Vector Error Correction Model (VECM). The results of the empirical analysis show the presence of a long-run relationship between real Gross Domestic Product and monetary policy instruments. Specifically, it finds that broad money supply (M2), deposit interest rate, and consumer price index affect economic growth positively and statistically significant. While the exchange rate affects real Gross Domestic Product negatively and statistically insignificant. The Granger causality test based on VECM shows two unidirectional causal relationships running from broad money supply and consumer price index to real GDP in the short run. Thus, the study suggests that policymakers concentrate on improving the economy by managing interest rates and maintain supporting environment for sustainable economic growth and development.

scholarly journals Business Cycle and The Macroeconomics Performance: Evidence of Malaysia and Indonesia

2015 ◽  
Vol 2 (1) ◽  
pp. 045
Author(s):  
Abdul Qoyum ◽  
M. Miftahussurur ◽  
Al-Amin Matae ◽  
Muhammad Yousuf ◽  
A. Abdurrahman
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Stock Prices ◽  
Consumer Price Index ◽  
Macroeconomic Fluctuations ◽  
Monetary Policies ◽  
Policy Makers ◽  
Real Gdp

Stable economic growth is the major macroeconomic goal which is all nations seek. Economist and policy makers have been tried to find the ways to sustain and maintain stable economic growth. This paper examines the macroeconomic fluctuations and economic growth in Malaysia and Indonesia and its determinant by using multiple regression models. Five variables were chosen for the model namely variables are Money supply (MS), Industrial production (IP), Interest rate (IR), exchange rate (ER), Consumer price Index (CPI) and stock prices. The study shows that Money supply (MS), Interest rate (IR), exchange rate (ER), and stock prices are among others, the determinant factors of macroeconomic fluctuations in both countries. Specifically, the empirical results reveal that Interest rate (IR), exchange rate (ER), and stock prices has significant contribution to the performance of real GDP in Malaysia while Money supply (MS) and exchange rate (ER) are the main cause of macroeconomic fluctuations in Indonesia. This may be due to the different monetary policies pursued by the two countries. The two countries might have different monetary policy strategies; Malaysia pursues interest rate targeting policy, whereas Indonesia applies inflation rate targeting policy.The study recommends for both countries government policies play an important role in economic performance. Therefore, a careful policy should be the foremost important factor for economic in these nations and the every country in general.

scholarly journals Monetary Policy Mechanisms and Economic Growth Stability in Nigeria

2020 ◽  
Vol 11 (6) ◽  
pp. 225
Author(s):  
Cordelia Onyinyechi Omodero ◽  
M. C. Okafor
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Policy Instruments ◽  
Policy Tools ◽  
Policy Tool ◽  
Growth Stability ◽  
Financial Power

The study considers the effectiveness of monetary policy tools in guaranteeing economic growth stability in Nigeria. In recent times monetary policy tools have become very productive in stabilizing an economy. Thus, this study employs three monetary policy instruments which include: money supply, interest rate and exchange rate to examine the effectiveness of the monetary policy on economic growth stability in Nigeria from 1998 to 2018. The findings reveal that the money supply is substantially positive in influencing the GDP, which is used as a proxy for economic growth stability. However, interest rate and exchange rate do not have a significant impact on the GDP. The study concludes that money supply is the most productive monetary policy tool in Nigeria and recommends its proper usage to achieve maximum economic benefit. The relevant financial power (CBN) in the country is encouraged to allow more accessibility to credits by reducing interest rate and exchange rate fluctuations.

scholarly journals Capital Flows and Money Supply: The Degree of Sterilization in Pakistan

2017 ◽  
Vol 4 (1) ◽  
pp. 18
Author(s):  
Hina Ali ◽  
Sadia Sajjad
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Money Supply ◽  
Capital Flows ◽  
Direct Investment ◽  
Price Index ◽  
Descriptive Analysis ◽  
Consumer Price Index ◽  
Series Data

The present study proposes to analyze the impact of the capital flows on the economic growth. The change in the capital flows affects the money supply in the economy which in return influences the economic growth. The augmented dickey fuller test (ADF), descriptive Analysis, correlation method, and the auto regressive distribution lag are employed in this work. The ADF test is delved to examine the Stationarity of the variables and the correlation between them. The descriptive analysis is used to check the normality of the variable whether the variables is normally distributed or not. The survey bases on time series data ranging from the year 1974 to 2014. The variables as the gross domestic product (GDP), exchange rate (ER), inflation (INF), consumer price index (CPI), money supply (M2), total reserves (TR) and the foreign direct investment (FDI), price indices (PI). The research findings are Foreign direct investment, Exchange rate, Inflation rate, Consumer Price Index has the positive impact on the GDP while the Private Investment, Total reserves, and Money supply have the negative impact on the GDP. The value of the R square is 0.99874 which is very good. It means that the 99 percent variations exist in dependent variable due to independent variables. 

scholarly journals The Nexus Between Monetary Policy and Economic Growth in Pakistan: Empirical Evidence Based on Bound Test Approach

2021 ◽  
Vol 4 (3) ◽  
pp. 613-624
Author(s):  
Mahmood Ul Hassan ◽  
Hina Ali ◽  
Saeed Ur Rahman ◽  
Sabiha Parveen
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Gross Domestic Product ◽  
Money Supply ◽  
Price Index ◽  
Negative Impact ◽  
Consumer Price Index ◽  
Domestic Product ◽  
Series Data ◽  
Bound Test

The objective of this research is to examine the monetary policy's impact on economic growth. Variables of study are Gross domestic product, Inflation, rate of interest, Exchange rate, Money supply, Investment, and Consumer Price Index and time series data is collected from. Gross domestic product is a dependent variable and all other variables are independent and have a great effect on the explanatory variable. In this study, the Augmented dicky fuller test is used to check out the stationarity of our selected variables and after that autoregressive distributed lag model co-integration technique is applied to estimate the parameters of the model. The result shows that inflation, interest rate, and consumer price index show a negative impact on gross domestic product. While other variables such as exchange rate, money supply, and investment show a positive impact on GDP. The study recommended that the desired level of output and employment can be attained by adopting sufficient strategies that reduce inflation in the economy.

scholarly journals EFFECT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL INVESTIGATION

10.26458/1815 ◽  
2018 ◽  
Vol 18 (1) ◽  
pp. 123-140 ◽  
Author(s):  
Lawrence Olisaemeka UFOEZE ◽  
J. C ODIMGBE ◽  
V. N. EZEABALISI ◽  
Udoka Bernard ALAJEKWU
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
Effect Of Monetary Policy ◽  
Positive Effect

The study investigated effect of monetary policy on economic growth in Nigeria. The natural log of the GDP was used as the dependent variables against the explanatory monetary policy variables: monetary policy rate, money supply, exchange rate, lending rate and investment. The time series data is the market controlled period covering 1986 to 2016. The study adopted an Ordinary Least Squared technique and also conducted the unit root and co-integration tests. The study showed that long run relationship exists among the variables. Also, the core finding of this study showed that monetary policy rate, interest rate, and investment have insignificant positive effect on economic growth in Nigeria. Money supply however has significant positive effect on growth in Nigeria. Exchange rate has significant negative effect on GDP in Nigeria. Money supply and investment granger cause economic growth, while economic growth causes interest rate in Nigeria. On the overall, monetary policy explain 98% of the changes in economic growth in Nigeria. Thus, the study concluded that monetary policy can be effectively used to control Nigerian economy and thus a veritable tool for price stability and improve output.

scholarly journals Pengaruh Ekonomi Makro Terhadap Indeks Harga Konsumen

2019 ◽  
Vol 3 (1) ◽  
pp. 25-34
Author(s):  
Fazhar Sumantri ◽  
Umi Latifah
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Central Bank ◽  
Money Supply ◽  
Significant Relationship ◽  
Price Index ◽  
Price Level ◽  
Consumer Price Index ◽  
Index Number ◽  
The Republic

Consumer Price Index (CPI) is an index number indicates the price level of commodity and services must be purchase by consumers inone period. The purpose of the research is to analyze macroeconomics impact to CPI on variable Interest Rate of Credit, Money Supply, USD Exchange Rate, and Inflation as variables. Data used in this research was taken from Central Statistics Agency Indonesia and The Central Bank of The Republic of Indonesia. The result from F test shows significant relationship in Interest Rate of Credit, Money Supply, USD Exchange Rate, and Inflation to CPI. Meanwhile t test shows there is no significant relationship between Money Supply and USD Exchange Rate to CPI, while significant relationship Interest Rate of Credit and Inflation to CPI. Based on Adjuted R Square; Interest Rate of Credit, Money Supply, USD Exchange Rate, and Inflation towards to CPI is 65.6% while the rest of it 34.4% was influenced by other factors.

Does monetary policy affect economic growth: evidence from Malaysia

2018 ◽  
Vol 34 (1) ◽  
pp. 2-20 ◽  
Author(s):  
Ergin Akalpler ◽  
Dilgash Duhok
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Money Supply ◽  
Positive Relationship ◽  
Developing Economies ◽  
Policy Instruments ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between monetary policy and economic growth in the light of a developing economy, with the main focus on Malaysia. Primarily, the research will concentrate on the interactions between interest rates, inflation, money supply and growth in GDP, which will serve as the instrument for measuring economic growth. Design/methodology/approach The research will apply quantitative analysis to determine the relationship between GDP growth and monetary policy instruments, particularly interest rate, money supply and level of inflation. Given the advancement and achievement in econometric analysis and computer software creation, the least-squares estimates analysis will be used to investigate the relationship and significance between these variables. Findings It is observed that relationship between economic growth and inflation is positive. This entails that a 1 percent change in inflation will result in a 77 percent increase in the level of economic growth in this economy. The linkage between economic growth and interest rates has also been observed to be positive. A positive nexus can be observed between economic growth and money supply. The coefficient value of 0.02 for money supply growth shows that it has the smallest effect on economic growth amongst the variables tested in the model. Research limitations/implications Based on the findings of this study, the following recommendations can be made, which could serve as policies instruments for Malaysian economic development. This does not mean that the findings can be generalized for other developing economies. Practical implications Observations from the test for economic application significance are based on the signs of the parameters. It was observed that inflation, interest rates and money supply all have a positive relationship with economic growth, which is in line with the a priori expectations. This means that monetary policy has positively affected the economic growth. Social implications The results of the OLS analysis reveal that the monetary policy instruments used for the model demonstrated that monetary policy has a positive relationship with economic growth in Malaysia. A breakdown of the individual monetary policy instruments shows that the interest rate, inflation and money supply all have individual positive relationships with economic growth. Originality/value A positive relationship exists between economic growth in Malaysia and all selected monetary instruments, namely, inflation, money supply and interest rate. The results show that the results show that inflation, interest rate and money supply will cause the economy to grow but their contribution to the developments is affected from other policy instruments which are used by the governments.

scholarly journals Monetary Policy and Domestic Private Investment in Nigeria

2021 ◽  
Vol 04 (07) ◽  
Author(s):  
Lubo Ebisine ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Money Supply ◽  
Price Index ◽  
Consumer Price Index ◽  
Private Investment ◽  
Insignificant Effect ◽  
Long Run ◽  
Domestic Debt ◽  
Domestic Savings

This paper empirically examined the effect of monetary policy on domestic private investment in Nigeria from 1981 to 2018. In other to achieve our objectives, annual time series data of the dependent variable – domestic private investment (DPI) and independent variables – money supply (MS), government domestic debt (GDD), government domestic savings (GDS), interest rate (INT) and consumer price index (CPI) were collected from secondary sources like CBN Statistical Bulletin and WDI. Thereafter, the data were analyzed using descriptive statistics and the econometrics technique of Vector Error Correction Mechanism (ECM) method of analysis. The results of analysis indicated that a long run relationship exists among the variables. Furthermore, the paper revealed that money supply (MS), government domestic savings (GDS). interest rate (INT) and consumer price index (CPI) have a negative and insignificant effect on domestic private investment in the long run but interest rate is significant at 5%, while government domestic debt (GDD), has a positive and insignificant effect on domestic private investment (DPI) in the long run in Nigeria within the period. Based on the above findings, the paper recommends as follows: Expansionary monetary policy should be formulated that will reduce interest rate, encourage borrowings and savings. This will expand commercial banks and other credit granting financial institutions which will encourage real investment in the economy.

The Role of Different Channels in Transmitting Monetary Policy into Output and Price in Vietnam

2015 ◽  
pp. 20-40
Author(s):  
Vinh Nguyen Thi Thuy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Monetary Transmission ◽  
Impulse Response Functions ◽  
Short Run ◽  
The Exchange Rate ◽  
The Interest Rate ◽  
Interest Rate Channel

The paper investigates the mechanism of monetary transmission in Vietnam through different channels - namely the interest rate channel, the exchange rate channel, the asset channel and the credit channel for the period January 1995 - October 2009. This study applies VAR analysis to evaluate the monetary transmission mechanisms to output and price level. To compare the relative importance of different channels for transmitting monetary policy, the paper estimates the impulse response functions and variance decompositions of variables. The empirical results show that the changes in money supply have a significant impact on output rather than price in the short run. The impacts of money supply on price and output are stronger through the exchange rate and credit channels, but however, are weaker through the interest rate channel. The impacts of monetary policy on output and inflation may be erroneous through the equity price channel because of the lack of an established and well-functioning stock market.

scholarly journals Effectiveness of Monetary Policy Instruments on Economic Growth in Jordan Using Vector Error Correction Model

2017 ◽  
Vol 9 (11) ◽  
pp. 194
Author(s):  
Rami Obeid ◽  
Bassam Awad
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Policy Instruments ◽  
Short Term ◽  
Correction Model ◽  
Vector Error Correction ◽  
Real Gdp ◽  
Vector Error ◽  
Effect Of Monetary Policy

The global financial crisis emphasized the important role of the prudent monetary policy in supporting economic growth through maintaining price stability. The monetary policy operational framework that was designed in 2008 was updated to include more instruments for managing monetary policy learning from the crisis lessons. Several studies analyzed various dimensions related to economic growth in Jordan such as Abdul-Khaliq, Soufan, and Abu Shihab (2013) and Assaf (2014), there were no studies that investigated the effect of monetary policy on economic growth in Jordan, at least recently, however. The study aims at measuring the effect of monetary policy instruments on the performance of Jordanian economy. Using quarterly data covering the period (2005-2015), an econometric model was examined using Vector Error Correction Model to assess the impact of monetary policy instruments on economic growth. The foremost advantage of VECM is that it has a nice interpretation of long-term and short-term equations. The results showed the existence of positive long-term and short-term effects of monetary policy instruments on the growth of real GDP. The model included three monetary policy instruments besides money supply. They are required reserve ratio, rediscount rate and overnight interbank loan rates as independent variables, and the real GDP growth as a dependent variable. The stationarity of the model time series was addressed. In addition, the stability of the model was tested using stability diagnostics tools. The results showed also an existence of inverse relationship between rediscount rate and economic growth in Jordan over both long and short terms.

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