<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper aims to survey the existing literature, both theoretical and empirical, on the relationship between monetary policy and economic growth. While there has been a wide range of studies on the existing relationship between monetary policy and economic growth, the nexus between the two remains inconclusive. This paper takes a comprehensive view of the theoretical evolution of the relationship and the respective recent empirical findings. Overall, this paper shows that the majority of findings support the relevancy of monetary policy in supporting economic growth, mainly in financially developed economies with fairly independent central banks. The relationship tends to be weaker in developing economies with structural weaknesses and underdeveloped financial markets that are weakly integrated into global markets. This paper concludes that monetary policy matters for growth both in the short-run and long-run despite the prevailing ambiguous relationship. The paper recommends intensive financial development measure for developing countries as well as structural reforms to address to supply side deficiencies.</p></abstract>

This paper aims to survey the existing literature, both theoretical and empirical, on the relationship between monetary policy and economic growth. While there has been a wide range of studies on the existing relationship between monetary policy and economic growth, the nexus between the two remains inconclusive. This paper takes a comprehensive view of the theoretical evolution of the relationship and the respective recent empirical findings. Overall, this paper shows that the majority of findings support the relevancy of monetary policy in supporting economic growth, mainly in financially developed economies with fairly independent central banks. The relationship tends to be weaker in developing economies with structural weaknesses and underdeveloped financial markets that are weakly integrated into global markets. This paper concludes that monetary policy matters for growth both in the short-run and long-run despite the prevailing ambiguous relationship. The paper recommends intensive financial development measure for developing countries as well as structural reforms to address to supply side deficiencies.

Monetary Policy and Economic Growth: A Review of International Literature

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Monetary Policy and Economic Growth: A Review of International Literature"}

This paper aims to survey the existing literature, both theoretical and empirical, on the relationship between monetary policy and economic growth. While there...

Monetary Policy and Economic Growth: A Review of International Literature

Published Online: May 14, 2018

Page range: 123 - 137

Received: May 12, 2017

Accepted: Jul 10, 2017

DOI: https://doi.org/10.2478/jcbtp-2018-0015

Keywords
Money supply, Interest rates, Output stabilisation, Long run neutrality

© 2017 Enock Nyorekwa Twinoburyo et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Monetary Policy and Economic Growth: A Review of International Literature

Published Online: May 14, 2018

Page range: 123 - 137

Received: May 12, 2017

Accepted: Jul 10, 2017

DOI: https://doi.org/10.2478/jcbtp-2018-0015

KeywordsMoney supply, Interest rates, Output stabilisation, Long run neutrality

© 2017 Enock Nyorekwa Twinoburyo et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Money supply, Interest rates, Output stabilisation, Long run neutrality