Testing the Relationship between Mony Supply and Gross Domestic Product in egypt | ||
| التجارة والتمويل | ||
| Article 19, Volume 31, Issue 2, June 2011, Pages 1-28 PDF (587.61 K) | ||
| DOI: 10.21608/caf.2011.129979 | ||
| Author | ||
| Mohammed Aboalsoaoud | ||
| Abstract | ||
| This paper uses the Cointegration. Error Correction Model, and Granger Causality techniques to determine the relationship between the real money suppl) and real GDP in Egypt, and the direction of the causality between the two variable* in both short and long run. The study covers the period from 1991 to 2010. ADF test showed the two scries are intcgiatcd of order one 1(1) The Cointegration test indicated the existence of a long run equilibrium between real GDP and real money supply based on F.ngle-Grangcr two steps test. I'he Error term and F-test from VECM beside the Granger causality test indicated unidirectional causality running from real GDP to real money supply in the ahotl run as well as in the long run This results consistent with the Keynesian theory, the (RBC) theory and various empirical studies in different countries We concluded that the monetary policy was not effective policy in Egypt on its effect on the real GDP during the study period | ||
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