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Document Details
Document Type
:
Article In Journal
Document Title
:
The Role of Money in Saudi Arabia: A Dynamic Analysis
تحليل دينامي لدور النقود في المملكة العربية السعودية
Subject
:
Economics
Document Language
:
Arabic
Abstract
:
This paper examines the role of money in the economy of Saudi Arabia using a vector autoregressive approach (VAR). Unit root tests show that logs of money supply (LM1), non-oil GDP (LNOY), and price level (LP) are difference stationary and cointegrated. Variance decompositions and impulse response functions reveal that there exists a bi-directional causation between money supply and nominal non-oil GDP and a unidirectional causation runs from LM1 to LP and from LNOY to LP. These findings suggest that inflation in Saudi Arabia may happen as a result of bottlenecks in supply side and/or a growth in money supply more than the growth in income. These results also lend partial support to the monetarist theory of inflation. Based on these results, it can be said that Saudi Monetary Agency (SAMA) might be able to successfully maintain price stability at consumer’s level by targeting narrow money stock. However, tight monetary policy could have a strong feedback on output. Therefore, simultaneous fiscal measures may help in achieving a longer-term sustainable economic growth.
ISSN
:
1319-0997
Journal Name
:
Economics and Administration Journal
Volume
:
13
Issue Number
:
1
Publishing Year
:
1420 AH
1999 AD
Article Type
:
Article
Added Date
:
Sunday, October 11, 2009
Researchers
Researcher Name (Arabic)
Researcher Name (English)
Researcher Type
Dr Grade
Email
حمد سليمان البازعي
HAMAD S. AL-BAZAI
Researcher
Files
File Name
Type
Description
21759.pdf
pdf
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