本实证研究采用了多种计量经济学方法得到结果，单位根检验采用了Levin、Lin和Chu、Breitung、Fisher-AD和PP检验、Im、Pesaran和Shin检验以及横截面增广的Im、Pesaran和Shin检验。对于横截面相关性和坡度不均匀性，采用了Pesaran（2004）、Pesaran和Yamagata（2008）的检验。协整关系采用Westerlund（2007）协整检验。此外，短期和长期结果均采用横截面增强ARDL检验。利用增广平均群检验了结果的鲁棒性.
Chapter One Introduction
1.1 Background and Significance
1.1.1 Background
Monetary policy refers to an attempt of monetary authority to influence thedirection of the economy (such as economic growth and price stability) through changesin money supply and interest rate (Nelson, 2008). Monetary policy is a tool ofmacroeconomic stability and the both developed and developing world is utilizing it toachieve stability. Economic growth and development are the foremost objective ofeconomic policy. In general, long run policies are advocated and implemented to achievethis economic objective, but it is difficult to achieve this core objective without maintaineconomic stability. Hence, economic stability is the pre-condition for the attainment ofeconomic growth and development. Therefore, utilization of human, financial andphysical resources and capital to get the prospective economic growth and developmentwithout focusing macroeconomic stability may result in allocative, distributive andproductive inefficiency. Moreover, it is also associated with other economic problemssuch as missing the potential output and employment in agricultural, industrial andservices sectors that could be achieved if monetary policy to get macroeconomic policywere implemented parallel to development policies. The ultimate objective ofmacroeconomic policies is to enhance economic growth and stabilize the price level.Monetary policy is designed to achieve these goals. Monetary policy plays a vital part inaffecting economic growth, price stability, exchange rate stability, and employment level,balance of payment and economic development of a country.
.....................
1.2 REVIEW OF LITERATURE
A reliable estimate of the money supply is an important sign of the GrossDomestic Product (GDP) and many other macroeconomic indicators. Monetaryauthorities are required to know whether there will be enough money supply to fulfil thedemand of economic agents like inpiduals and investors. An accurate prediction of thesupply of money provides the policy makers a consistent instrument for following andforecasting interest rates. In recent years, the issue of possible effectiveness of monetarypolicy in affecting growth and other macroeconomic activities has been intensivelyinvestigated in the literature with contradictory evidences. Many studies like (Nwoko andIhemeje, 2016; Ahmad et al., 2016; Lennard, 2018; Duskobilov, 2017; Rutner, 1975; Lutand Moolio, 2015; Precious and Palesa, 2014; Auerbach and Rutner, 1975; Afrin, 2017;Aastveit, Natvik and Sola, 2017 and Ditimiet al., 2011) have contributed to theunderstanding of the effectiveness of money supply. Most literature has examined therapport amid money supply and output in a single equation frame work. Nonetheless, intheory, money supply is determined in a simultaneous equation model. If a singleequation framework is employed to study the growth function, the estimators will bebiased and inconsistent and therefore, unreliable. Monetary easing resulting in moremoney supply or monetary tightening leading to less money supply is also supposed to beaffected by GDP. Consequently, a single equation method of estimation will provideparameters that would be biased and inconsistent. During the era of 1960s and 1970s, theresearchers utilized structural macroeconomic models to observe the effects of monetarypolicy on macroeconomic activities including economic growth. Later on, theintroduction of VAR approach in late 1970s provides a different approach to consider theeffects of monetary policy on macroeconomic variables (Sim, 1980).
........................
Chapter Two Trends and Statistics in Key Economic Indicators
2.1 Broad Money
This measure currency including demand deposits, outside banks, foreign, savings, timecurrency deposits. It also covers travelers and banks checks and other securities like commercialpaper and certificates of deposit.
Figure 2.2 Broad Money as a Percent of GDP of SAARC countries
Figure 2.2 shows Broad money as a percent of GDP for SAARC countries over theperiod of 2000 to 2018. It is evident from the figure that Malpes has the highest moneysupply as percent of GDP. The upward trend in broad money as a percent of GDP isevident for all SAARC countries over the time.
............................
2.2 Trade openness
Trade openness is a measure of economic policies that either restrict or invite tradebetween countries. For example, if a country sets a policy of high trade tariffs, thusrestricting the desirability of international trade, this restrictive policy will inhibit othercountries from sending exports and accepting imports from that country.
Figure 2.3 Trade Openness as a Percent of GDP of SAARC countries
Figure 2.3 shows trade openness as a percent of GDP for SAARC countries over theperiod of 2000 to 2018. It is evident from the figure that Nepal is the most open economyas compare to other SAARC countries. Moreover, the downward trend in trade opennessas a percent of GDP is evident for all SAARC countries over the time.
..........................
Chapter Three Theoretical Framework.......................... 21
Chapter Four Data and Methodology..............................24
4.1 Empirical Model:....................24
4.2. Econometric Methods:.............................. 25
Chapter Five Empirical Results and Analysis.........................31
5.1. Results and Discussion:......................31
5.2. Descriptive Statistics..............................31
Chapter Five Empirical Results and Analysis
5.1. Results and Discussion:
The efficacy of monetary policy in SAARC countries are largely attributed to thesocioeconomic indicators in these countries. Generally, SAARC countries have weakfinancial system and undeveloped human capital. Despite this, there is heterogeneity inthe monetary policy growth nexus in SAARC countries. Table 5.1 illustrates the mean,mode, median and other descriptive statics values of monetary policy variables, controlvariables and GDP over the period of 2000 to 2018. It shows countries such as Bhutan,Afghanistan are concentrating on very high interest rate while countries such as Nepal,Pakistan and Sri Lanka have low interest rates over the period of 2000 to 2018
Table 5.1. Data and Descriptive Statistics
..............................
Chapter Six Conclusions
This research aims to explore the rapport between monetary policy and economicgrowth. The sampled area of this research is South Asian Association for RegionalCooperation (SAARC) comprising Pakistan, Bhutan, Malpes, Bangladesh, Nepal, SriLanka, Afghanistan and India from 2000-2018. For monetary policy measurement, weused broad money (M2) and for economic growth, gross domestic product is used. Othercontrolled variables like human capital which is measure through an index, tradeopenness which is measured as the sum of imports and exports to GDP and real interestrate are used.
This empirical research uses several econometric approaches to acquire the results.For unit root test, Levin, Lin and Chu, Breitung, Fisher-AD and PP test, Im, Pesaran andShin test and cross-sectionally augmented Im, Pesaran and Shin test are used. For,cross-section dependence and slope heterogeneity, Pesaran (2004), Pesaran and Yamagata(2008) tests are used. Westerlund (2007) cointegration test is applied for cointegrationrelationship. Moreover, cross-sectional augmented ARDL test is used for short-run andlong-run results. The robustness of results is checked by using augmented mean group(AMG) and common correlated effect mean group (CCEMG).
The results found mixed order of integration with the existence of the problem ofheterogeneity and cross-section dependence. The Westerlund (2007) cointegration testconfirm long-run cointegration relationship among all the variables. For the long-run andshort-run, broad money, trade openness and human capital is supportive in improvingeconomic growth in case of South Asian Association for Regional Cooperation (SAARC).However, in contrast, real interest rate is declining economic growth. These resultsconfirm that increasing broad money along with human capital and trade opennessimprove economic growth. While, high real interest rate may crowd-out investment andwhich in turn lower economic growth.
reference(omitted)