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The Impact of Monetary Policy on Economic Development: Evidence from Lao PDR

Khaysy Srithilat and Gang Sun

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the impact of monetary policy on the economic development by using annual time series data from 1989-2016. The unit root testing result suggests that all variables are stationary at first difference; therefore, the Johansen Cointegration and Error Correction Model has been employed to analyze the association between variables. The finding shows that money supply, interest rate, and inflation rate negatively effect on the real GDP per capita in the long run and only the real exchange rate has a positive sign. The error correction model result indicates the existence of short-run causality between money supply, real exchange rate and real GDP per capita.

Keywords: monetary policy; economic development; laos; VECM; cointegration. (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-mac, nep-mon and nep-sea
Date: 2017-02-17, Revised 2017-04-27
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Published in Global Journal of HUMAN-SOCIAL SCIENCE: Economics 17.2(2017): pp. 9-15

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