Financial Development and the Effect of Monetary Policy on Output in Open Economy

Document Type : Scientific paper

Authors

1 MA student at University of Mazandaran,Babolsar, Iran

2 Associate professor, Department of Economics, University of Mazandaran, Babolsar , Iran

3 Professor, Department of Economics, University of Mazandaran, Babolsar, Iran

Abstract

In evaluation of countries’ economic performance and policy, Some macroeconomic indicators plays a key role due to its impact on other macroeconomic variables. Employment, income distribution, price level, consumption and investment are very important economic variables that are affected by economic growth. Therefore, one of the most important goals of economic policies is to achieve a stable high economic growth rate. Because of that, recognizing the factors that determine the effect of monetary policy on economic growth, makes it possible for policy makers to plan for increasing the economic growth. The aim of this study is to examine the financial development and the impact of globalization on influence of monetary policies on GDP. For this purpose, data of 34 high-income countries for  2000-2014 and Auto Generation Vector Panel Model have been used. This study showed that Despite of openness the reaction of GDP to the impact of monetary policy is positive. In other words, monetary policy with trade openness leads to an increasing in GDP trend. one of the policy proposals of this study is trade liberalization by removing tariffs and Import restrictions.  

Keywords

References

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Macroeconomics Research Letter
Volume 13, Issue 26
November 2018
Pages 13-32

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History

  • Receive Date: 04 November 2017
  • Revise Date: 21 March 2018
  • Accept Date: 30 July 2018

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