IDEAS home Printed from https://ideas.repec.org/a/rfh/bbejor/v12y2023i4p510-517.html
   My bibliography  Save this article

Unlocking the Secrets of Economic Growth: Understanding the Transmission Mechanism of the Monetary Policy

Author

Listed:
  • Husnain Shahzad

    (Department of Economics, University of Sahiwal, Sahiwal, Pakistan)

  • Ayza Shoukat

    (Department of Economics, University of Sahiwal, Sahiwal, Pakistan)

  • Muhammad Abdullah

    (Department of Economics, University of Sahiwal, Sahiwal, Pakistan)

Abstract

This research investigates how changes in monetary policy impact Pakistan's economic growth. trajectory focusing on macroeconomic indicators and monetary policy's role in long-term economic objectives. The research uses a quantitative approach and econometric methods to evaluate data from 1991 to 2020. Results show that certain variables like interest rates capital formation labor force and current account balance positively impact economic growth while others like exchange rates net trade money supply and private sector access to domestic credit have negative impacts. These statistically significant correlations show how monetary policy variables and economic outcomes interact in complex ways.

Suggested Citation

  • 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.
    • Handle: RePEc:rfh:bbejor:v:12:y:2023:i:4:p:510-517
    DOI: https://doi.org/10.61506/01.00159
    as

    Download full text from publisher

    File URL: https://bbejournal.com/BBE/article/view/568/561
    Download Restriction: no
    File URL: https://bbejournal.com/BBE/article/view/568
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.61506/01.00159?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chang, Wen-ya & Chen, Ying-an & Chang, Juin-jen, 2013. "Growth and welfare effects of monetary policy with endogenous fertility," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 117-130.
    2. Mallick, Sushanta K. & Sousa, Ricardo M., 2012. "Real Effects Of Monetary Policy In Large Emerging Economies," Macroeconomic Dynamics, Cambridge University Press, vol. 16(S2), pages 190-212, September.
    3. Enock Nyorekwa Twinoburyo & Nicholas M. Odhiambo, 2018. "Monetary Policy and Economic Growth: A Review of International Literature," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 7(2), pages 123-137.
    4. repec:cbk:journl:v:1:y:2013:i:3:p:111-138 is not listed on IDEAS
    5. Ismail O Fasanya & Adegbemi B.O Onakoya & Mariam A Agboluaje, 2013. "Does Monetary Policy Influence Economic Growth in Nigeria?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 635-646.
    6. Ismail O. FASANYA & Adegbemi B.O ONAKOYA & Mariam A. AGBOLUAJE, 2013. "Does Monetary Policy Influence Economic Growth in Nigeria?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 635-646, May.
    7. Ummad Mazhar & Fahd Rehman, 2021. "Monetary Policy in a Developing Country: A Case of Pakistan," Asian Journal of Management Cases, , vol. 18(2), pages 144-155, September.
    8. Bojan Dimitrijević & Ivan Lovre, 2013. "Essay on Monetary Policy and Economic Growth," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(1), pages 111-138.
    9. Zakir, Nadia & Malik, Wasim Shahid, 2013. "Are the effects of monetary policy on output asymmetric in Pakistan?," Economic Modelling, Elsevier, vol. 32(C), pages 1-9.
    Full references (including those not matched with items on IDEAS)

    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. Olufemi Muibi Saibu & Abiodun Murithadoh Musbaudeen, 2018. "Monetary Policy Cyclicality, Industrial Output and Economic Growth Interactions in Nigeria," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 22(2), pages 457-470, Spring.
    2. Benson Ogbonna & Kalu Uma, 2014. "Monetary Policy Transmission Mechanism In Nigeria: An Overview," Proceedings of International Academic Conferences 0702101, International Institute of Social and Economic Sciences.
    3. Famoroti Jonathan Olusegun & Adeleke Omolade, 2022. "Impact of monetary policy transmission mechanism in West African countries," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(1), pages 20-42, March.
    4. Enock Nyorekwa Twinoburyo & Nicholas M Odhiambo, 2018. "Can Monetary Policy drive economic growth? Empirical evidence from Tanzania," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(2), June.
    5. Shobande Olatunji A., 2019. "Monetary Policy Spillovers Through Industrial Growth in Nigeria: A Time Series Analysis," Economics and Business, Sciendo, vol. 33(1), pages 94-110, January.
    6. Oluwaseun Okikiola, 2021. "The Impact of Money Market Dynamics on the Economic Growth of Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(10), pages 77-85, October.
    7. Edet Joshua Udoh & Sunday Brownson Akpan, 2019. "Macroeconomic variables affecting fish production in Nigeria," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 9(2), pages 216-230, December.
    8. Li, Hongshu & Sarfraz, Muddassar & Nawi, Hafizah Mat & Nguyen, Nhat Tan & Albasher, Gadah & Ramazanovna, Nargiza Kuzieva, 2023. "Does natural resource cause equitable development or resource curse? An analysis of macroeconomic policies for reducing environmental degradation," Resources Policy, Elsevier, vol. 87(PA).
    9. Adebayo Augustine Kutu & Ntokozo Patrick Nzimande & Simiso Msomi, 2017. "Effectiveness of Monetary Policy and the Growth of Industrial Sector in China," Journal of Economics and Behavioral Studies, AMH International, vol. 9(3), pages 46-59.
    10. Ebenezer G Olamide & Andrew Maredza, 2021. "The Short and Long Run Dynamics of Monetary Policy, Oil Price Volatility and Economic Growth in the CEMAC Region," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(1), pages 78-89, January.
    11. Iwedi Marshal, 2019. "Monetary Policy Transmission Channels and Economic Growth in Nigeria," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 93-100.
    12. Rami Obeid & Bassam Awad, 2017. "Effectiveness of Monetary Policy Instruments on Economic Growth in Jordan Using Vector Error Correction Model," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(11), pages 194-206, November.
    13. Mohammed Modu & Mustapha M.Kime & Buba M. Yunusa, 2023. "Analysis of Monetary Policy and Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(10), pages 319-334, October.
    14. Olufemi Samuel Adegboyo & Sunday Anderu Keji & Oluwadamilola Tosin Fasina, 2021. "The impact of government policies on Nigeria economic growth (case of fiscal, monetary and trade policies)," Future Business Journal, Springer, vol. 7(1), pages 1-14, December.
    15. Marouane Daoui, 2023. "Monetary Policy and Economic Growth in Developing Countries: A Literature Review," Papers 2303.03162, arXiv.org.
    16. Igbafe, Timothy, 2022. "Effectiveness of Monetary Policy in Stimulating Economic Growth in Nigeria," MPRA Paper 112622, University Library of Munich, Germany.
    17. Udoh, Edet Joshua & Akpan, Sunday Brownson, 2019. "Macroeconomic Variables Affecting Fish Production in Nigeria," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 9(02), January.
    18. Yakubu Yusuf* & Ebeh, Joy Eleojo & Ajayi Okunola Tosin, 2022. "Monetary Policy and Balance of Payment: An Empirical Evidence In Nigeria," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 7(1), pages 01-09, March.
    19. 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.
    20. srithilat, khaysy & Sun, Gang, 2017. "The Impact of Monetary Policy on Economic Development: Evidence from Lao PDR," MPRA Paper 79369, University Library of Munich, Germany, revised 27 Apr 2017.

    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:rfh:bbejor:v:12:y:2023:i:4:p:510-517. 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: Dr. Muhammad Irfan Chani (email available below). General contact details of provider: https://edirc.repec.org/data/rffhlpk.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.