IDEAS home Printed from https://ideas.repec.org/a/jaf/journl/v10y2019i2n321.html
   My bibliography  Save this article

Monetary policy and economic growth

Author

Listed:
  • Hassen GUENICHI

  • Hamdi KHALFAOUI

Abstract

In this paper, we empirically examine the impact of key interest rate on national and sector economic growth. Using Tunisian quarterly data in the period 2000-2018, we estimate, in the first step, the long term relationships through VECM analysis and, in the second we enrich our study by introducing variables of interaction. We find that key interest rate significantly and positively influences national and sector economic growth and negatively affects the inflation. In specific, our results show that the economic crisis and the approved credits respectively influence negatively and positively the link between key interest rate and Tunisian economic growth. Finally, we show that the impact of changes in monetary policy is weaker in crisis period and improved by the bank credit rises.

Suggested Citation

  • Hassen GUENICHI & Hamdi KHALFAOUI, 2019. "Monetary policy and economic growth," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(2), pages 49-68, December.
    • Handle: RePEc:jaf:journl:v:10:y:2019:i:2:n:321
    as

    Download full text from publisher

    File URL: https://www.scientific-society.com/AF/article/view/321
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hassen GUENICHI & Hamdi KHALFAOUI, 2019. "Monetary policy and economic growth," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(2), pages 49-68, December.
    2. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 147-180.
    3. N. G. Mankiw, 2009. "The Macroeconomist as Scientist and Engineer," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 5.
    4. Mr. Hamid R Davoodi & S. V. S. Dixit & Gabor Pinter, 2013. "Monetary Transmission Mechanism in the East African Community: An Empirical Investigation," IMF Working Papers 2013/039, International Monetary Fund.
    5. BIKAI, J. Landry & KENKOUO, Guy Albert, 2015. "Analysis and evaluation of the Monetary Policy Transmission Channels in the CEMAC: A SVAR and SPVAR Approaches," MPRA Paper 78227, University Library of Munich, Germany.
    6. Ben S. Bernanke & Ilian Mihov, 1998. "Measuring Monetary Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 869-902.
    7. Robert Engle & Clive Granger, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    8. Thomas J. Sargent, 1972. "Anticipated Inflation and the Nominal Rate of Interest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 86(2), pages 212-225.
    9. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    10. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    11. Thanabalasingam Vinayagathasan, 2013. "Monetary Policy and the Real Economy: A Structural VAR Approach for Sri Lanka," GRIPS Discussion Papers 13-13, National Graduate Institute for Policy Studies.
    12. World Bank, 2019. "Finance for Growth," World Bank Publications - Reports 33563, The World Bank Group.
    13. N/A, 2002. "Volume 7, Issue 2," Sociological Research Online, , vol. 7(2), pages 153-153, May.
    14. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    15. Rabanal, Pau, 2007. "Does inflation increase after a monetary policy tightening? Answers based on an estimated DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 906-937, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Husnain Shahzad & Ayza Shoukat & Muhammad Abdullah, 2023. "Unlocking the Secrets of Economic Growth: Understanding the Transmission Mechanism of the Monetary Policy," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(4), pages 510-517.
    2. Riadh Trabelsi, 2024. "Sources of macroeconomic fluctuations in Tunisia: a structural VAR approach," SN Business & Economics, Springer, vol. 4(10), pages 1-28, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hassen GUENICHI & Hamdi KHALFAOUI, 2019. "Monetary policy and economic growth," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(2), pages 49-68, December.
    2. Ivan Kitov & Oleg Kitov, 2013. "Does Banque de France control inflation and unemployment?," Papers 1311.1097, arXiv.org.
    3. Pär Österholm, 2005. "The Taylor Rule: A Spurious Regression?," Bulletin of Economic Research, Wiley Blackwell, vol. 57(3), pages 217-247, July.
    4. Richard H. Clarida & Lucio Sarno & Mark P. Taylor & Giorgio Valente, 2006. "The Role of Asymmetries and Regime Shifts in the Term Structure of Interest Rates," The Journal of Business, University of Chicago Press, vol. 79(3), pages 1193-1224, May.
    5. Bardsen, Gunnar & Eitrheim, Oyvind & Jansen, Eilev S. & Nymoen, Ragnar, 2005. "The Econometrics of Macroeconomic Modelling," OUP Catalogue, Oxford University Press, number 9780199246502.
    6. Petar Peshev, 2015. "Modelling the demand and supply of loans in Bulgaria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 52-69,70-85.
    7. Martin T. Bohl & Pierre L. Siklos, 2004. "The Bundesbank's Inflation Policy and Asymmetric Behavior of the German Term Structure," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 495-508, August.
    8. Jardet, Caroline, 2004. "Why did the term structure of interest rates lose its predictive power?," Economic Modelling, Elsevier, vol. 21(3), pages 509-524, May.
    9. Raymond Y.C. Tse & John Raftery, 2001. "The effects of money supply on construction flows," Construction Management and Economics, Taylor & Francis Journals, vol. 19(1), pages 9-17, January.
    10. Mai, Nhat Chi, 2014. "Monetary transmission mechanism analysis in a small, open economy: the case of Vietnam," OSF Preprints ybc8p, Center for Open Science.
    11. Serhan Cevik & Katerina Teksoz, 2014. "Hitchhiker's guide to inflation in Libya," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 7(1), pages 1-21.
    12. Nyorekwa, Enock Twinoburyo & Odhiambo, Nicholas Mbaya, 2016. "Monetary policy and economic growth in Kenya:The role of money supply and interest rates," Working Papers 20712, University of South Africa, Department of Economics.
    13. Santos, João & Domingos, Tiago & Sousa, Tânia & St. Aubyn, Miguel, 2016. "Does a small cost share reflect a negligible role for energy in economic production? Testing for aggregate production functions including capital, labor, and useful exergy through a cointegration-base," MPRA Paper 70850, University Library of Munich, Germany.
    14. Baillie, Richard T & Bollerslev, Tim, 1994. "Cointegration, Fractional Cointegration, and Exchange Rate Dynamics," Journal of Finance, American Finance Association, vol. 49(2), pages 737-745, June.
    15. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    16. Xiaojie Xu, 2017. "The rolling causal structure between the Chinese stock index and futures," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 31(4), pages 491-509, November.
    17. Jean-Baptiste Gossé & Cyriac Guillaumin, 2013. "L’apport de la représentation VAR de Christopher A. Sims à la science économique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(4), pages 309-319.
    18. Nielsen, Morten Orregaard & Shimotsu, Katsumi, 2007. "Determining the cointegrating rank in nonstationary fractional systems by the exact local Whittle approach," Journal of Econometrics, Elsevier, vol. 141(2), pages 574-596, December.
    19. Mauricio, Jose Alberto, 2006. "Exact maximum likelihood estimation of partially nonstationary vector ARMA models," Computational Statistics & Data Analysis, Elsevier, vol. 50(12), pages 3644-3662, August.
    20. La, Le & Mei, Bin, 2015. "Portfolio diversification through timber real estate investment trusts: A cointegration analysis," Forest Policy and Economics, Elsevier, vol. 50(C), pages 269-274.

    More about this item

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • N8 - Economic History - - Micro-Business History
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jaf:journl:v:10:y:2019:i:2:n:321. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oussama Quentin Kasseh (email available below). General contact details of provider: https://edirc.repec.org/data/urredtn.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.