Cointegration, Error Correction and the Demand for Money in Saudi Arabia

Mamdouh Alkhatib Alkswani () and Hamad A. Al-Towaijari
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Mamdouh Alkhatib Alkswani: Economics Dept. Administrative Sc. College. King Saud University, Postal: P.O.Box 2459 Riyadh 11451 - Saudi Arabia, http://www.ksu.edu.sa/
Hamad A. Al-Towaijari: Economics Dept. Administrative Sc. College. King Saud University, Postal: P.O.Box 2459 Riyadh 11451 - Saudi Arabia, http://www.ksu.edu.sa/

Economia Internazionale / International Economics, 1999, vol. 52, issue 3, 299-308

Abstract: This study investigates the determinants of the money demand function in Saudi Arabia. The Saudi economy was instable during the period 1977-1997 because of its dependence on the production of oil. This dependence affects sharply the rates of growth and the rates of inflation. The integration and cointegration proprieties of the data are analyzed and the model of error correction is used to estimate the demand for money. This paper concludes that even in the period of high instability in the economy, there exists a stationarity in the long run demand for narrow money (Ml) in Saudi Arabia.

JEL-codes: C22 E41 (search for similar items in EconPapers)
Date: 1999
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