Subscribe

Subscribe to our Newsletter and get informed about new publication regulary and special discounts for subscribers!

ILSHS > Volume 67 > Impact of Money Supply on Sri Lankan Economy: An...
Impact of Money Supply on Sri Lankan Economy: An Econometric Analysis
< Back to Volume

Impact of Money Supply on Sri Lankan Economy: An Econometric Analysis

Full Text PDF

Abstract:

Economists argue that the money supply positively impact on economic growth of nations. In Sri Lankan context this statement was not tested econometrically. Therefore, the aim of this study was to scrutinize the impact of money supply on Sri Lankan economy. To exam this objective, this study considered the time series data from the period of 1959 to 2013 and used two types of variables such as dependent and independent variables. Here, the gross domestic product was considered as dependent variable, and Money supply, Exchange rate, Exports earnings, Imports outflow, the Colombo consumer price index were deemed as independent variables. In the meantime, the multivariate econometric method was used to test the impacts of money supply on economic growth of Sri Lanka. According to the analytical results, the money supply has kept positive impact on the economic growth of Sri Lanka at 1% significant level. The R-squared of the estimated model was 92% which was indicated that the estimated model was desirable. Meanwhile, the Durbin Watson test statistic was 2.43 and also the Breusch –Godfrey serial correlation LM test results was greater than 5%. Therefore, these statistics indicated that, the estimated model was not suffering from serial correlation.

Info:

Periodical:
International Letters of Social and Humanistic Sciences (Volume 67)
Pages:
11-17
DOI:
https://doi.org/10.18052/www.scipress.com/ILSHS.67.11
Citation:
A.L.M. Aslam, "Impact of Money Supply on Sri Lankan Economy: An Econometric Analysis", International Letters of Social and Humanistic Sciences, Vol. 67, pp. 11-17, 2016
Online since:
March 2016
Authors:
A.L.M. Aslam
Keywords:
Colombo Consumer Price Index, Economic Growth, Exchange Rate, Exports Earnings, Imports Outflow, Money Supply
Export:
RIS, BibTeX, Text
Distribution:
Open Access

Creative Commons License
This work is licensed under a
Creative Commons Attribution 4.0 International License

References:

[1] A. M. Muhd Zulkhibri, Causality Link between Money, Output and Prices in Malaysia: An Empirical re – examination, 7(1) (2007) 211- 219.

[2] A. Hossain, Granger Causality between Inflation, Money growth, Currency Devaluation and Economic Growth, International Journal of Applied Econometrics and Quantitative Studies, 2 (3) (2005) 45- 68.

[3] A. L. Mohamed Aslam, S. M. Ahamed Lebbe, The relationship between money stock and economic growth of Sri Lanka: An AEG testing approach, 5th international symposium – 2015 at South Eastern University of Sri Lanka (2015) 290-292.

[4] B. Liu, Empirical research on the relationship among money supply, output and prices, Journal of finance, 29(7) (2002) 10 -16.

[5] B.T. Macallam, Rational Expectation and Macroeconomic Stabilization Policy, Journal of money, credit and Banking, 12(2) (1980) 716 – 746.

[6] C. Sims, Money, Income and Causality, the journal of American economic review, America, 63(4) (1972) 540-552.

[7] E.I. Seoud, M.S. Abou, Testing the relationship between money supply and GDP in Bahrain, International Journal of Economics, Commerce and Management, United Kingdom, II(5) (2014) 1 – 16.

[8] M. Lashkary, B.H. Kashani, the Impact of Monetary Variable on Economic Growth in Iran: A Monetarists' Approach, World Applied Science Journal, 15(3) (2011) 449 – 456.

[9] M. Nouri, A.J. Samimi, The Impact of Monetary Policy on Economic Growth in Iran, Middle – East Journal of Scientific Research, 9(6) (2011) 740 – 743.

[10] M. S. Ogunmuyiwa, E. Francis, Money supply – Economic growth Nexus in Nigeria, Journal of Social Sciences, 22(3) (2010) 199 – 204.

[11] N. Ikechukwu, The impact of Money Supply on Economic Growth in Nigeria (1981- 2010), Department of economics, Faculty of Management and Social Sciences, Cristias university, Amorji – Nike, Enugu, Nigeria (2012).

Show More Hide
Cited By:

[1] A. Aslam, S. Ahamed Lebbe, "Impact of Fiscal Deficit on Inflation in Sri Lanka: An Econometric Time Series Analysis", International Letters of Social and Humanistic Sciences, Vol. 70, p. 8, 2016

DOI: https://doi.org/10.18052/www.scipress.com/ILSHS.70.8

[2] D. Doan Van, "Money supply and inflation impact on economic growth", Journal of Financial Economic Policy, Vol. ahead-of-print, 2019

DOI: https://doi.org/10.1108/JFEP-10-2018-0152