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Money Supply as a Conduit of the Consumption in the Saudi Economy: A Co-integration Approach
International Journal of Economics, Finance and Management Sciences
Volume 4, Issue 5, October 2016, Pages: 269-274
Received: Aug. 30, 2016; Accepted: Sep. 8, 2016; Published: Sep. 28, 2016
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Author
Abdulaziz Hamad Algaeed, Department of Economics, College of Economics and Administrative Sciences, Imam Mohamed Bin Saud Islamic University, Riyadh, Saudi Arabia
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Abstract
This paper focuses on exploring the conduit through which wealth, aggregated by broad money supply, affects the real private consumption in the Saudi economy. In other words, the relationship between money supply (proxy of wealth), among other variables, and the real private consumption function. This study covers the period of 1985-2014. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of wealth over private consumption. Also, consumption is affected negatively by changes in prices in the long-run.
Keywords
Consumption, Saudi Arabia, Co-integration Analysis, Wealth, Inflation
To cite this article
Abdulaziz Hamad Algaeed, Money Supply as a Conduit of the Consumption in the Saudi Economy: A Co-integration Approach, International Journal of Economics, Finance and Management Sciences. Vol. 4, No. 5, 2016, pp. 269-274. doi: 10.11648/j.ijefm.20160405.16
Copyright
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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