The Impact of the Broad Money Supply (M2) on Economic Growth per Capita in Palestine
DOI:
https://doi.org/10.51325/ejbti.v1i2.86Keywords:
Economic Growth, Money Supply, Inflation Rate, Gross Fixed Capital Formation, Autoregressive Distributed Lag Regression (ARDL).Abstract
This study examines the effect of the broad money supply (M2) on the per capita economic growth in Palestine using time series data from 2000 to 2020. The study uses autoregressive distributed lag model (ARDL), the cointegration approach and the error correction model to investigate the effect of money supply on gross domestic product (GDP) per capita. The model is determined by four macroeconomic variables, namely, gross domestic product (GDP) per capita, broad money supply (M2), gross fixed capital formation (GFCF), and inflation rate (INF). The results show that the money supply, the total capital formation, and the inflation rate have a positive impact on the economic growth in the short run. However, none of these variables affect the economic growth in the long term.
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