The Effects of American Monetary Policy on GCC Economies

Said, Radwa Radwan

doi:10.14445/23939125/ijems-v6i9p115

Cited by 1 publication

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“…The value of the coefficient on the volatility of broad money is statistically significant at the 5% level. This result is contrary to other findings (Awortu and Timi, 2018; Said, 2019; Tasos, 2019). The negative sign is justified because the revenue of an unstable government’s income entails such negative volatility.…”

Section: Methodscontrasting

confidence: 99%

“…To test the impact of monetary policy in the Gulf region, Said (2019) examined the impact of monetary policy shocks on real variables, money supply (M2), oil revenue, government expenditure, federal funds rate and economic growth. She applied a vector autoregressive approach to annual data from 1990 to 2017 for five Gulf Cooperation Countries (GCC).…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…Although numerous studies have examined various aspects of the Saudi economy (Said, 2019), to our knowledge, there is no in‐depth empirical analysis of monetary volatility and its impact on real output growth. To fill the existing gap in the literature, this study is completely different from other studies in terms of understanding the impact of monetary volatility on real economic growth.…”

Section: Introductionmentioning

confidence: 99%

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Monetary volatility and the dynamics of economic growth: An empirical analysis of an oil‐based economy, 1970–2018

Algaeed

Algethami

2022

OPEC Energy Review

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Over the past decades, and since the first development plan in 1970, Saudi Arabia has controlled the stability of its economy through prudent fiscal policy and tight monetary policy. This study examines the impact of monetary volatility on real gross domestic product (GDP) growth in an oil‐based economy from 1970 to 2018, using the Hodrick–Prescott filtering approach. Although standard methods such as GARCH are used to test volatility, the uniqueness of this study is that it tests the volatility of monetary policy using ordinary least squares (OLS), autoregressive distributed lag (ARDL) and IRF methods. We find that the standard deviation of the broad money supply and the real interest rate business cycle tends to have a negative impact on real growth in the short and long run, supporting the proposition that a high interest rate negatively affects real growth. We also document that the standard deviation of the real exchange rate business cycle has a positive (negative) effect on real growth in the short and long run and is not statistically significant. This suggests that the volatility of the real exchange rate does not affect real growth. Moreover, the magnitude of the volatility of the coefficients is lower in the long run than in the short run. To achieve sustainable economic growth, policy makers need to plan how to manage the volatility of the money supply and the interest rate in the short run and develop long‐run strategies to manage volatility in the long run. To control monetary volatility, policymakers should also control government spending by dampening the volatility of oil prices, which ultimately affect the money supply and thus stable economic growth.

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Section: Methodscontrasting

confidence: 99%

Section: Review Of Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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