MONEY GROWTH AND INFLATION: EMPIRICAL EVIDENCE FROM GCC REGION
Journal Title: European Journal of Business and Social Sciences - Year 2015, Vol 4, Issue 7
Abstract
This study examines the relationship between money growth and inflation in GCC countries using cointegration and causality analysis. The study used annual time series data from 1970 to 2013, Johansen cointegration approach identify long run relationship. The empirical results confirm that in the long run money supply growth has significant and positive relationship with inflation. However, interest rates and import have positive and significant relationship with inflation but exchange rates and GDP have negative and significant relationship with inflation in the long run. The study concludes that for maintaining price stability and minimum rate of inflation, GCC countries needs to reduce money supply growth, improve GDP, reduce interest rate and impose strong import restrictions measures as well as exchange rate depreciation along with import substitution strategy.
Authors and Affiliations
Dr. Ali Yousfat| Associate Professor, Department of Economics, University of Adrar, Algeria P.O.Box: 886 Adrar 01000 Adrar Algeria
Keywords
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