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 TypeDr GradeEmail
حمد سليمان البازعي HAMAD S. AL-BAZAIResearcher  

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