An econometric study of the role of monetary policy in sustainable economic growth in Yemen during the period (1990-2015)

Abstract

The importance of monetary policy is particularly prominent in developing countries seeking to address structural imbalances and achieve sustainable growth rates. The Yemeni economy during the period (1990 – 2015) is a model of worth study, given the economic, political, and security challenges it faced, which directly impacted the role of monetary policy tools.

The current study aimed to understand the role of Yemeni monetary policy in achieving sustainable economic growth during the period (1990-2015). To achieve this goal, the ARDL model was chosen based on checking time series data. Real GDP was used as an dependent variable, representing economic growth, and money supply was used as an independent variable, representing monetary policy. The study yielded certain results, the most important of which is the existence of a long-term equilibrium relationship between the variables in the model, and that the error correction coefficient is one year and three months.