An assessment of the relationship between money supply and economic growth in Namibia
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Date
2022
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Abstract
This study examined the relationship between broad money supply and economic growth in Namibia. The ARDL bounds test approach to cointegration was applied on quarterly data from 2008: Q1 to 2020: Q4. The study employed the Augmented Dickey-Fuller, and Phillip Peron tests to examine the order of integration of the variables, and the results indicated that except for M2, variables are integrated of the first order. The ARDL bounds test approach to cointegration revealed no long-run relationship between the variables under study. The granger causality results found unidirectional causality from the inflation rate to the real economic growth rate, from the real economic growth rate to money supply, from the repo rate to real economic growth rate, and evidence of bidirectional causality between money supply and the repo rate. The study did not find causality between money supply and inflation in Namibia. Taking note of the country’s monetary policy conduct, this study suggests that the Bank of Namibia should initiate products or special vehicles through which money supply may be increased to stimulate growth and reduce unemployment in the short run.
Description
A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science (Economics)
Keywords
Economic growth in Namibia, Supply and inflation in Namibia