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The Narrow and Expanded Money Supply and Its Impact on Interest Rate and Product of the Private Sector in Jordan during the Period (1990–2019)

Fedel Mayuf Al-Habashneh
Fedel Mayuf Al-Habashneh
   | 21 nov. 2022
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Publié en ligne: 21 nov. 2022
Pages: 143 - 154
DOI: https://doi.org/10.2478/fman-2022-0009
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© 2022 Fedel Mayuf Al-Habashneh, published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The results of estimating the narrow money supply and its impact on the product of the private sector for the period 1990–2019 (Source: Author calculations)

Dependent Variable: LOG (RGDP (−1))
Method: Fully Modified Least Squares (FMOLS)
Date: 08/27/21 Time: 16:55
Sample (adjusted): 1992–2019
Included observations: 28 after adjustments
Co-integrating equation deterministic: C @TREND
Long-run covariance estimate (Bartlett kernel, Newey-West fixed bandwidth = 3.0000)
Variable Coefficient Std. Error t-Statistic Prob.
LOG (RM1(−1)) 0.163907 0.051114 3.206691 0.0107
LOG (RI (−1)) −0.063862 0.024318 −2.626062 0.0275
LRS (−1) 0.001379 0.006432 0.214375 0.8350
C 6.919875 0.424254 16.31067 0.0000
@TREND 0.041141 0.002861 14.38172 0.0000
R-squared 0.983108 Mean dependent var 8.440703
Adjusted R-squared 0.975601 S.D. dependent var 0.222873
S.E. of regression 0.034813 Sum squared resid 0.010908
Durbin-Watson stat 2.002496 Long-run variance 0.000560

Unit-root test results for all variables in logarithmic form (Source: Author calculations)

Series Level I (0) First difference I (1)
Prob.* ADF(1) Prob.* ADF(0)
RM1 −1.061977 0.9014 −4.154914 0.0281
RM2 −0.454775 0.9730 −5.336574 0.0076
RI −1.777415 0.6643 −5.279076 0.0048
RS −3.196090 0.1222 −4.128478 0.0347
RGDP 1.782549 0.9999 −3.903325 0.0284

The co-integration test of the product significance and narrow money supply (Source: Author calculations)

Date: 08/27/21 Time: 16:10
Sample (adjusted): 1992–2021
Included observations: 28 after adjustments
Trend assumption: Linear deterministic trend
Series: RGDP RM1 RS RI
Lags interval (in first differences): 1 to 1
Unrestricted Co-integration Rank test (Trace)
Hypothesized No. of CE(s) Eigenvalue Trace Statistic
None* 0.988578 100.7746
At most 1* 0.805223 38.16362
At most 2 0.458768 15.26105
At most 3 0.378841 6.666354

The results of estimating the expanded money supply and its impact on the product of the private sector for the period 1990–2019 (Source: Author calculations)

Dependent Variable: LOG (RGDP (−1))
Method: Fully Modified Least Squares (FMOLS)
Date: 04/27/13 Time: 16:50
Sample (adjusted): 1994–2007
Included observations: 28 after adjustments
Co-integrating equation deterministic: C @TREND
Long-run covariance estimate (Bartlett kernel, Newey-West fixed bandwidth = 3.0000)
Variable Coefficient Std. Error t-Statistic Prob.
LOG (RM2(−1)) 0.476792 0.098343 4.848279 0.0009
LOG (RI (−1)) −0.068219 0.017718 −3.850202 0.0039
LRS (−1) 0.005757 0.005222 1.102459 0.2989
C 6.256834 0.418663 14.94479 0.0000
@TREND 0.021296 0.005508 3.866342 0.0038
R-squared 0.987006 Mean dependent var 8.440703
Adjusted R-squared 0.981230 S.D. dependent var 0.222873
S.E. of regression 0.030534 Sum squared resid 0.008391
Durbin-Watson stat 2.119070 Long-run variance 0.000363

The product and expanded money supply co-integration test (Source: Author calculations)

Date: 08/27/21 Time: 16:17
Sample (adjusted): 1994–2021
Included observations: 28 after adjustments
Trend assumption: Linear deterministic trend
Series: RGDP RM2 RS RI
Lags interval (in first differences): 1 to 1
Unrestricted Co-integration Rank test (Trace)
Hypothesized No. of CE(s) Eigenvalue Trace Statistic 0.05 Critical Value Prob.**
None * 0.986910 105.5298 47.85613 0.0000
At most 1 * 0.797305 44.82701 29.79707 0.0005
At most 2 * 0.692529 22.48226 15.49471 0.0038
At most 3 * 0.347210 5.970999 3.841466 0.0145

The results of Grainger causality test for the variables of GDP significance and expanded money supply (Source: Author calculations)

Pairwise Granger Causality tests
Date: 08/27/21 Time: 15:57
Sample: 1990–2019
Lags: 2
Null hypothesis Obs F-Statistic Prob.
RM2 does not Granger Cause RGDP 28 4.29357 0.0491
RGDP does not Granger Cause RM2 1.08341 0.3788
RS does not Granger Cause RGDP 28 3.22124 0.0881
RGDP does not Granger Cause RS 6.28570 0.0196
RI does not Granger Cause RGDP 28 0.65219 0.5439
RGDP does not Granger Cause RI 2.67863 0.1223
RS does not Granger Cause RM2 28 0.08400 0.9201
RM2 does not Granger Cause RS 4.99296 0.0348
RI does not Granger Cause RM2 28 0.30317 0.7457
RM2 does not Granger Cause RI 4.25087 0.0501
RI does not Granger Cause RS 28 0.17800 0.8398
RS does not Granger Cause RI 0.75382 0.4981

Results of Grainger's causality test for variables of the GDP significance and narrow money supply (Source: Author calculations)

Pairwise Granger Causality tests
Date: 07/27/21 Time: 15:45
Sample: 1990–2019
Lags: 2
Null hypothesis Obs F-Statistic Prob.
RM1 does not Granger Cause RGDP 14 3.11350 0.0938
RGDP does not Granger Cause RM1 4.21957 0.0510
RS does not Granger Cause RGDP 14 3.22124 0.0881
RGDP does not Granger Cause RS 6.28570 0.0196
RI does not Granger Cause RGDP 14 0.65219 0.5439
RGDP does not Granger Cause RI 2.67863 0.1223
RS does not Granger Cause RM1 14 1.03800 0.3930
RM1 does not Granger Cause RS 0.83248 0.4659
RI does not Granger Cause RM1 14 0.79127 0.4824
RM1 does not Granger Cause RI 5.47108 0.0279
RI does not Granger Cause RS 14 0.17800 0.8398
RS does not Granger Cause RI 0.75382 0.4981
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