scholarly journals The impact of monetary policy on the economic growth of a small and open economy: The case of South Africa

2014 ◽  
Vol 8 (3) ◽  
pp. 348-362 ◽  
Author(s):  
V Khabo ◽  
C Harmse
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Monetary Policy ◽  
Money Supply ◽  
Open Economy ◽  
Opposite Effect ◽  
Test Statistic ◽  
Monetary Authorities ◽  
Repo Rate ◽  
The Impact

This study evaluates the impact of monetary policy on the economic growth of a small and open economy like that of South Africa. Structuralists contend that changes in money supply (M3) and inflation (CPI) are not significantly related to changes in economic growth (GDP), while orthodox economists argue that they are. Stucturalists also hold that monetary authorities cannot control M3, whereas orthodox economists believe they can. To structuralists, when monetary authorities pursue an expansionary policy, the opposite effect is achieved. Orthodox economists counter this argument. The ADT test statistic against the McKinnon critical values was used and it was found (i) that money supply changes and inflation are significantly related to changes in economic growth, and (ii) whereas monetary authorities can control M3 through the repo rate,  they cannot keep it within set targets.

scholarly journals Effect of Money Supply on Economic Growth: A Comparative Study of Nigeria and Ghana

2019 ◽  
Vol 7 (3) ◽  
pp. 16
Author(s):  
Cordelia Onyinyechi Omodero
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Negative Impact ◽  
Ordinary Least Squares ◽  
Negative Influence ◽  
Positive Influence ◽  
Least Squares Regression ◽  
Monetary Authorities ◽  
Significant Negative Impact ◽  
The Impact

The effect of money supply in enhancing economic growth in Nigeria and Ghana is investigated in this study. The major objectives of the study are to establish the joint and individual influences of money supply mechanisms on economic growth in Nigeria and Ghana. The study employs data from 2009 to 2018 and uses Ordinary Least Squares regression technique for analysis of the data. The findings reveal that broad money supply (M2) has an insignificant negative influence on RGDP in Nigeria, but in Ghana the impact is significant and positive. Broad money supply (M3) exerts insignificant positive influence on RGDP in Nigeria, but significant negative impact on RGDP in Ghana while credit to private sectors (CPS) has insignificant positive influence on RGDP in both Nigeria and Ghana. The study among others suggests that the Monetary Authorities in the two countries should come up with monetary policy strategies that will help drive the economy better and such policies should consider M2 and CPS more as their contributions are necessary for economic expansion that lead to more output and employment.

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 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 The Impact of Monetary Policy on Financial Market in South Africa: A VAR Analysis

2014 ◽  
Vol 6 (8) ◽  
pp. 636-646 ◽  
Author(s):  
Flavien Fokou Noumbissie
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
Stock Market ◽  
Money Supply ◽  
Discount Rate ◽  
Financial Market ◽  
Negative Impact ◽  
Consumer Price Index ◽  
Wealth Creation ◽  
The Impact

Like in many other countries, the South African financial market facilitates the process of raising capital by channelling funds to more productive economic activity, thereby building the nation's economy while enhancing job opportunities and wealth creation. The aim of this paper is to assess the impact of monetary policy on financial market in South Africa. It is important to constantly look into this interaction since policy decisions have a direct influence on financial market. A negative response from the market side may jeopardise economic stability. The study uses the vector autoregressive (VAR) model to evaluate the impact of monetary policy on financial market in South Africa. The model consists of five policy instruments as variables; namely: money supply (M3), real exchange rate(ER), discount Rate (R), consumer price index (CPI), gross domestic product (GDP) and the two market related variables: Stock market turnover (S) and Bond market turnover (B). Data is obtained from SARB and OECD databases for a period of 53 quarters from 2000:Q1 to 2013:Q1. By the use of impulse response function (IRF), the study found that given current economic situation in South Africa, stock market turnover reacts positively to money supply; discount rate; real exchange and GDP shocks. On the other hand stock market turnover reacts negatively to CPI economic shocks. To correct CPI negative impact on markets, we suggest that the policymakers could envisage a contractionary monetary policy translated by a proportional cut in money supply through the sales of government securities.

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.

scholarly journals Analysis of monetary regulation of the investment sphere in the Republic of Belarus

2021 ◽  
Vol 107 ◽  
pp. 09001
Author(s):  
Marina Zelenkevich ◽  
Natallia Bandarenka
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Open Economy ◽  
Financial Stability ◽  
Developing Economies ◽  
Small Open Economy ◽  
Price Stability ◽  
Practical Implementation ◽  
The Republic ◽  
The Impact

The purpose of the article is to substantiate the possibility and necessity of the central bank’s monetary policy to stimulate investment and economic growth for developing economies on the example of the investment sphere and monetary policy in Belarus. It was determined that the impact of monetary regulation on investment and economic growth is achieved in the course of the central bank’s activities to maintain indicators of price and financial stability which reflect favourable conditions for investment. Price stability is achieved through the implementation of various central bank strategies such as targeting the exchange rate, money supply and inflation. These strategies are defined as the objectives of monetary policy. The article discusses the advantages of monetary regulation in comparison with fiscal regulation, and also contains an analysis of its practical implementation in the Republic of Belarus in the period 2000–2019. As a result of the study the economic and financial results of the strategies applied at different stages were determined, their consequences for the economy were substantiated, and the strategies that best affect the financial and economic indicators in the country were identified. For countries with a small open economy which includes Belarus maintaining price and financial stability is complemented by a set of measures to reduce the devaluation expectations of market entities and create a favorable foreign economic environment.

Money supply and inflation impact on economic growth

2019 ◽  
Vol 12 (1) ◽  
pp. 121-136 ◽  
Author(s):  
Dinh Doan Van
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Money Supply ◽  
Karl Marx ◽  
Continuous Increase ◽  
Content Type ◽  
The Government ◽  
Short Time ◽  
The Impact

Purpose At present, countries are concerned about inflation and the impact of inflation on each country’s economic growth. This inflation has been said by economists that inflation is a phenomenon of currency and currency, which has caused inflation in some countries by their monetary policy. According to the economic theory of Karl Marx, Irving Fisher, Friedman, inflation is caused by a continuous increase in the money supply. Design/methodology/approach The economic theories of Fisher, Friedman and an econometric model are applied to analyse the relationship between money supply and inflation. Besides, Vietnam’s and China’s research data are also collected in the period of 2012-2016. Findings It is found out that the continuous increase in the money supply causes inflation in the long-term, but the continuous increase in the money supply growth does not cause inflation in a short time, this was analyzed based on the theory of monetary quantity. Moreover, Chia’s and Vietnam’s correlations of the money supply growth and inflation are 99.1 per cent. These correlations are very close. Originality/value Research results show that money supply and inflation are closely related, and the money supply directly affects economic growth. Therefore, the government should have the relevant monetary policy to grow the economy and proposals to make monetary policy, control inflation levels and stimulate economic growth.

scholarly journals Does Monetary Policy Boost Economic Growth? The Case of Small Open Economy

2020 ◽  
Vol 11 (3) ◽  
pp. 216
Author(s):  
Javid Aliyev ◽  
Shahriyar Mukhtarov ◽  
Khanlar Haydarov ◽  
Murad Isgandarov
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Open Economy ◽  
Small Open Economy ◽  
Policy Tools ◽  
Integration Methods ◽  
Monetary Base ◽  
Long Run ◽  
The Impact

The main aim of this paper is to investigate the impact of monetary policy tools on economic growth in Azerbaijan during 2005-2018 using the Vector Error Correction Model (VECM). Also, different co-integration methods, namely, Johansen, DOLS, FMOLS and CCR were utilized for the robustness test. The outcomes of the different co-integration methods are consistent with one another and confirm the existence of long-run relationships among variables. Furthermore, the estimation results of VECM show that the monetary base and exchange rate have a positive and statistically significant impact on economic growth in the long-run, while the discount rate is insignificant. The paper concludes that the monetary base and exchange rate should be promoted by policymakers over other monetary policy tools during monetary policy implementation toward stimulating economic growth.

scholarly journals MEASURE THE IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH IN SUDAN FOR PERIOD 1970-2018

2019 ◽  
pp. 5-10
Author(s):  
Tomader Gaber ELbashir Elhassan
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Significant Relationship ◽  
Inflation Rate ◽  
Gdp Growth ◽  
Correction Coefficient ◽  
Short Run ◽  
The Impact

The objective of this study was to measure the impact of Monetary Policy on Economic Growth in Sudan. It based on the following hypotheses: The most critical factors impacting Economic Growth(GDP) in the long- and short-run: exchange rate, inflation, Money supply, and Lending cost . There was a statistically significant relationship between Economic Growth and: exchange rate, inflation, Money supply, and Lending cost . The study used a descriptive approach and the analytical statistical method to construct the model and Eviews8 Program for data analysis. The Data were collected from the Bank of Sudan for period 1990-2018. Using An autoregressive distributed lag (ARDL) approach was to estimate the model in the short and long run. Findings were as follows that there was a statistically significant relationship between the Economic Growth (GDP) and its factors in the long- and short-run. The money supply had a positive and statistically significance impact on the GDP growth. The exchange rate had a positive e and statistically significance impact on GDP growth. The inflation rate coefficient is negative, and statistically significance impact on GDP growth and Lending cost coefficient was a negative and statistically insignificant impact on GDP growth. Finally, correction coefficient values had high speed in overtaking shocks. The study recommended reducing inflation rate through appropriate economic policies in order to activate the effect of Total Investment Lending cost rate index. KEYWORDS: Inflation, Exchange Rate, ARDL, Growth, Co-integration.

scholarly journals Inflation Targeting Monetary Policy and Unemployment in South Africa

2018 ◽  
Vol 10 (4(J)) ◽  
pp. 88-96 ◽  
Author(s):  
Harris Maduku ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Monetary Policy ◽  
Exchange Rate ◽  
South African ◽  
Inflation Targeting ◽  
Annual Data ◽  
The South ◽  
Reserve Bank ◽  
The Impact

We analyze the impact of inflation, growth and exchange rate on unemployment in South Africa using annual data spanning 1980- 2017. Using the ARDL methodology we find that there is a negative longrun relationship between inflation and unemployment in South Africa and inflation is significant in explaining unemployment. Other variables of interest, economic growth and exchange rate are also significant in explaining unemployment. We use the findings of our study to propose that the South African Reserve Bank(SARB) should consider revising its objectives so that they can consider getting involved in targeting unemployment so that they help nurse the economy from the wounds of high inequality and poverty. 

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