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

Journal Article

Alkswani, Mamdouh Alkhatib . 1999

• المجلة \ الصحيفة: ECONOMIA INTERNAZIONALE
• رقم العدد: 3
• رقم الإصدار السنوي: LII
• الصفحات: 299-308

مستخلص المنشور

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 the dependence on the production of oil. This dependence affects sharply the rates of growth and the rates of inflation. The unit roots 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 (M) in Saudi Arabia.