Impact of Monetary Policy on Gross Domestic Product (Gdp)
IMPACT OF MONETARY POLICY ON GROSS DOMESTIC PRODUCT (GDP) by IRFAN HAMEED,
PhD Scholar & Lecturer, Iqra University, Business Administration Department, Karachi.
&
UME-AMEN,
Lecturer, PAF-KIET, College of Management Sciences, Karachi.
ABSTRACT
This research article focuses on the impact of Monetary Policy on GDP. GDP no doubt is affected by the Monetary Policy of the state. The research papers of various authors have been studied in this regard to prove the Hypothesis and after in depth analysis by applying Regression Analysis technique it has been observed that the relationship between the two exists. The data of past 30 years of Pakistan has been used for driving the conclusion. The study proved that the interest rate has minor relationship with GDP but the Growth in Money Supply greatly affects the GDP of an economy, obviously various unknown factors also affects the GDP.
Growth in Money Supply has a huge impact on GDP. The Research study can further be used for developmental projects for the Growth of Economy, Quality improvements, Household production, the underground economy, Health and life expectancy, the environment, Political immunity and ethnic justice.
KEY WORDS: MONETARY POLICY, GROSS DOMESTIC PRODUCT, INFLATION, MONEY SUPPLY.
INTRODUCTION
Monetary policy can be defined as the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply
Title: IMPACT OF MONETARY POLICY ON GROSS DOMESTIC PRODUCT (GDP)
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research
Pages: 1348-1361
of money. Monetary policy uses a variety of
PhD Scholar & Lecturer, Iqra University, Business Administration Department, Karachi.
&
UME-AMEN,
Lecturer, PAF-KIET, College of Management Sciences, Karachi.
ABSTRACT
This research article focuses on the impact of Monetary Policy on GDP. GDP no doubt is affected by the Monetary Policy of the state. The research papers of various authors have been studied in this regard to prove the Hypothesis and after in depth analysis by applying Regression Analysis technique it has been observed that the relationship between the two exists. The data of past 30 years of Pakistan has been used for driving the conclusion. The study proved that the interest rate has minor relationship with GDP but the Growth in Money Supply greatly affects the GDP of an economy, obviously various unknown factors also affects the GDP.
Growth in Money Supply has a huge impact on GDP. The Research study can further be used for developmental projects for the Growth of Economy, Quality improvements, Household production, the underground economy, Health and life expectancy, the environment, Political immunity and ethnic justice.
KEY WORDS: MONETARY POLICY, GROSS DOMESTIC PRODUCT, INFLATION, MONEY SUPPLY.
INTRODUCTION
Monetary policy can be defined as the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply
Title: IMPACT OF MONETARY POLICY ON GROSS DOMESTIC PRODUCT (GDP)
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research
Pages: 1348-1361
of money. Monetary policy uses a variety of
References: Fry (1988). Money, Interest, & Banking in Economic Development. Johns Hopkins Press, Baltimore. World Bank (1993). The East Asian Miracle, Oxford University Press, New York. Title: IMPACT OF MONETARY POLICY ON GROSS DOMESTIC PRODUCT (GDP) COPY RIGHT © 2011 Institute of Interdisciplinary Business Research Pages: 1348-1361