Economic recovery through the money supply and public spending in Morocco: an empirical investigation

Jihane Benkhaira and Hafid El Hassani

African Journal of Economic and Management Studies, 2023, vol. 16, issue 3, 394-409

Abstract: PurposeThe present article aims to estimate an autoregressive vector model covering the period of 1990–2021 to analyze the effect of public spending and monetary supply increases in economic activity in Morocco.Design/methodology/approachA literature review on the policy of recovery with fiscal and monetary tools and its theoretical foundations was established. Then, an empirical study on the Moroccan context was executed to study the effectiveness of these instruments in Morocco from 1990 to 2021, using autoregressive vector modeling.FindingsThe results present a state of a positive relationship and statistical significance of public spending, money supply and economic growth. The impulse response function analysis and the forecast error variance decomposition showed that public spending does not have a large impact on gross domestic product, while the money supply has a real power to stimulate the growth of economic activity in Morocco.Originality/valueThis study aims to demonstrate the positive effect of the coordination of public spending and monetary supply increases on gross domestic product in Morocco. Additionally, the analysis using vector autoregressive modeling, impulse response functions, variance decomposition techniques and causality tests, provides crucial insights to guide researchers, practitioners and policymakers in developing more effective and resilient economic strategies. The findings from this study not only illuminate immediate recovery strategies but also contribute to strengthening the resilience of economies against potential future shocks.

Keywords: Economic recovery; Gross domestic product; Public spending; Money supply; Autoregressive vector model (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajemsp:ajems-04-2023-0134

DOI: 10.1108/AJEMS-04-2023-0134

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