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McKinnon’s Complementarity Hypothesis: Empirical Evidence for the Arab Maghrebean Countries

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  • Amaira Bouzid

    (University of Tunisia)

Abstract

This study aims to verify the financial repression theory’s assumptions for the Arabic Maghrebean countries during a time period ranging from 1973 to 2003. First, the interest rates in the Arab Maghrebean countries were regulated. Moreover, the low and administered interest rate discourages savings, retards the efficient allocation resources, increases the segmentation of financial markets, constrains investment and in term lowers the economic growth rate. This paper is to provide empirical evidence concerning neoliberal hypothesis for Tunisia, Algeria and Morocco. The money demand and investment function are estimated in static long-run formulations (cointegration regression) as well as in the dynamic formulation (VECM).

Suggested Citation

  • Amaira Bouzid, 2012. "McKinnon’s Complementarity Hypothesis: Empirical Evidence for the Arab Maghrebean Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(44), pages 23-36, June.
    • Handle: RePEc:rej:journl:v:15:y:2012:i:44:p:23-36
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    Cited by:

    1. Moyo, Clement & Le Roux, Pierre, 2018. "Interest rate reforms and economic growth: the savings and investment channel," MPRA Paper 85297, University Library of Munich, Germany.
    2. Kizito Uyi Ehigiamusoe & Mohamad Shaharudin Samsurijan, 2021. "What matters for finance‐growth nexus? A critical survey of macroeconomic stability, institutions, financial and economic development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5302-5320, October.
    3. Muhammad Mehtab AZEEM & Ayub MOHAMMAD, 2015. "Money and Physical Capital Relationship: McKinnon’s Complementarity Hypothesis on Turkey’s Economy," Expert Journal of Finance, Sprint Investify, vol. 3(1), pages 21-30.
    4. Anthony Olugbenga Adaramola & Modupe F. Popoola, 2019. "Long and Short Run Relationship between Stock Market Development and Economic Growth in Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 11(5), pages 45-53.
    5. Clement Moyo & Pierre Le Roux, 2019. "Interest Rate Reforms and Economic Growth in SADC Countries: The Savings and Investment Channel," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(4), pages 507-523, December.

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    More about this item

    Keywords

    Neo-liberal Hypothesis; Cointegration Test; Vectoriel Error Correction Model; Arab Maghrebean Countries;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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