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Asymmetrical effects of real exchange rate on the money demand in Saudi Arabia: A non-linear ARDL approach

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  • Haider Mahmood
  • Tarek Tawfik Yousef Alkhateeb

Abstract

This present research investigates the money demand function of Saudi Arabia using a long period 1968–2016. In addition, the asymmetrical effects of real exchange rate changes have also been explored in the estimated money demand function. Our empirical results suggest that income and inflation have positive and negative effects on money demand respectively. Further, a real appreciation of US dollar has a positive effect but a real depreciation has a negative effect on the money demand. Furthermore, income and price homogeneity hypotheses do not hold for the estimated elasticities. Moreover, the estimated model is found stable with the theoretically expected effects of money demand’s determinants. Therefore, we are suggesting money supply as a monetary policy instrument to the economy of Saudi Arabia.

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  • Haider Mahmood & Tarek Tawfik Yousef Alkhateeb, 2018. "Asymmetrical effects of real exchange rate on the money demand in Saudi Arabia: A non-linear ARDL approach," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-12, November.
    • Handle: RePEc:plo:pone00:0207598
    DOI: 10.1371/journal.pone.0207598
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    3. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Al-Qahtani, Maleeha Mohammed Zaaf & Allam, Zafrul Allam & Ahmad, Nawaz & Furqan, Maham, 2019. "Energy consumption, economic growth and pollution in Saudi Arabia," MPRA Paper 109143, University Library of Munich, Germany.
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    5. Mahmood, Haider, 2020. "Level of Education and Renewable Energy Consumption Nexus in Saudi Arabia," MPRA Paper 109141, University Library of Munich, Germany.
    6. Ahmad, Abdul-Rahim & Tasadduq, Imran A. & Imam, Muhammad Hasan & Al-Ahmadi, Mohammad Saad & Ahmad, Muhammad Bilal & Tanveer, Muhammad & Mahmood, Haider, 2021. "Intelligent Decision Support in Automating ABET Accreditation Processes: A Conceptual Framework," MPRA Paper 109151, University Library of Munich, Germany.
    7. Tanveer, Muhammad & Hassan, Shafiqul & Mahmood, Haider & Khan, Syed Abdul Rehman, 2021. "The Use of Social Media by Managers During the Pandemic to Accomplish the Tasks," MPRA Paper 109249, University Library of Munich, Germany.
    8. Lee-Chea Hiew & Chin-Hong Puah & Mohammad Affendy Arip & Mei-Teing Chong, 2019. "Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia¡¯s Money Demand Specification," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(6), pages 232-240, October.
    9. Mahmood, Haider, 2020. "Impact of financial market development on the CO2 Emissions in GCC countries," MPRA Paper 109134, University Library of Munich, Germany.
    10. Tanveer, Muhammad & Mahmood, Haider & Haq, Ikram Ul & Rather, Raouf Ahmad & Ali, Haider, 2021. "Higher Education Quality Assurance Framework Pathway for Transformation in Pakistan: Managerial and Economic Perspectives," MPRA Paper 109253, University Library of Munich, Germany.
    11. Mahmood, Haider, 2018. "An Investigation of Macroeconomic Determinants of FDI Inflows in Bangladesh," MPRA Paper 109448, University Library of Munich, Germany.
    12. Malika Neifar & Niazi Kammoun, 2022. "Revisit of Tunisia s Money Demand Function: What About Oil Price and Exchange Rate Effects?," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 106-116, September.
    13. Mahmood, Haider & Tanveer, Muhamamd & Ahmad, Abdul-Rahim & Furqan, Maham, 2021. "Rule of Law and Control of Corruption in Managing CO2 Emissions Issue in Pakistan," MPRA Paper 109250, University Library of Munich, Germany.
    14. Nazif Durmaz & Tairu Jie, 2024. "Money demand in Mexico: a nonlinear ARDL approach," Economics and Business Letters, Oviedo University Press, vol. 13(1), pages 20-28.

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