Impact of Money Supply, Gross National Saving and Economic Growth on Inflation Rate


Impact of Money Supply, Gross National Saving and Economic Growth on Inflation Rate


Endashaw Sisay Sirah

Department of Economics, Mizan Tepi University


The quantity theory of money, inflation monetary theory, modern quantity theory of money and inflation, new inflation, structural inflation theory, a new neo-classical synthesis of inflation, neo political macro-economics of inflation and Phillips curve theories are gratified. Just like several developed and developing countries, in Ethiopia one of the incredible macroeconomic objectives is to improving the living standard of peoples with low inflation. Though, there has been substantial argument on the condition of the inflation and economic growth correlation. In the late 1970s and at the beginning of 1980s, various nations, comprising the United States, practiced great inflation. A comprehensive agreement arose that this routine was undesirable, and monetary officials all over the world agreed policies intended to reduce high inflation. If inflation is painfully high, policymakers distinguished what track they desirable to down inflation even though they were indeterminate of its final terminus. Inflationary delinquent has become the greatest significant macroeconomic tricky of the Ethiopian economy in current existences. Mainly for this review the author used five empirical papers which focused on the impact of money supply, economic growth and gross national saving on inflation. The result imply that on some researches money supply (in long run and short run) and real growth domestic product (in long run) has positive and negative impact on inflation rate in Ethiopia respectively. Some of the studies proved that there is negative relationship between inflation rate and gross national saving. The causality result implies as there is bi-directional causality between inflation rate and money supply. Some of the studies also finalized that real gross domestic product unidirectional granger cause inflation rate. Even if there is no consistent result but the study recommends appropriate intervention should be important by using monetary policy and fiscal policy on each respective variables. The author also insight other interested researchers to review this title by concerning other macroeconomic variables.


Keywords: Money Supply, Gross National Saving, Economic Growth, Inflation Rate

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How to cite this article:
Endashaw Sisay Sirah. Impact of Money Supply, Gross National Saving and Economic Growth on Inflation Rate .International Journal of Economics, Sociology and Education, 2020,1:2


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