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Impact of Money Supply on Sri Lankan Economy: An Econometric Analysis
[journal article]
Abstract Economists argue that the money supply positively impact on economic growth of nations. In Sri Lankan context this statement was not tested econometrically. Therefore, the aim of this study was to scrutinize the impact of money supply on Sri Lankan economy. To exam this objective, this study conside... view more
Economists argue that the money supply positively impact on economic growth of nations. In Sri Lankan context this statement was not tested econometrically. Therefore, the aim of this study was to scrutinize the impact of money supply on Sri Lankan economy. To exam this objective, this study considered the time series data from the period of 1959 to 2013 and used two types of variables such as dependent and independent variables. Here, the gross domestic product was considered as dependent variable, and Money supply, Exchange rate, Exports earnings, Imports outflow, the Colombo consumer price index were deemed as independent variables. In the meantime, the multivariate econometric method was used to test the impacts of money supply on economic growth of Sri Lanka. According to the analytical results, the money supply has kept positive impact on the economic growth of Sri Lanka at 1% significant level. The R-squared of the estimated model was 92% which was indicated that the estimated model was desirable. Meanwhile, the Durbin Watson test statistic was 2.43 and also the Breusch –Godfrey serial correlation LM test results was greater than 5%. Therefore, these statistics indicated that, the estimated model was not suffering from serial correlation.... view less
Keywords
Sri Lanka; economic growth; money supply; gross domestic product; time series; rate of exchange; econometrics
Classification
National Economy
Free Keywords
Colombo Consumer Price Index; Economic Growth; Exchange Rate; Exports Earnings; Imports Outflow; Money Supply
Document language
English
Publication Year
2016
Page/Pages
p. 11-17
Journal
International Letters of Social and Humanistic Sciences (2016) 67
ISSN
2300-2697
Status
Published Version; peer reviewed