Abstract:
The issue of money supply is one of the most important economic topics, which
have received the attention of many thinkers at the theoretical and practical
levels, because of the prominent and effective role that money supply plays in
achieving economic stability, as it affects many macroeconomic variables such
as GDP and inflation, and for this reason Monetary authorities in various
countries are of great importance to the money supply and the regulation of its
issuance in line with the established economic goals, which requires that the
monetary authority track the money supply and the factors that can affect it,
because the money supply circulating in the economy is a product of the overlap
of several decisions and behaviors of economic units from a monetary authority.
Commercial banks and the public (individuals and institutions), and this
research came to highlight the importance of money, which is the basis of the
process of the monetary and financial system, and the growth rate is an integral
part of it, although each of them has a role in improving the economic system of
the state. Money and the growth rate, and our study found that there is a causal
relationship between money supply and the trend of GDP, that is, the change in
money supply in the broad sense It causes a change in GDP in the short run, and
a co-integration relationship at a significant level of 5%, because the effect value
is greater than the critical values, and this means that there is a long-term
equilibrium relationship between GDP and money supply in the long run.
