Testing the relationship between money supply and GDP in Algeria using an ARDL approach

الملخص EN

This study investigates the relationship between broad money supply (m2) and gross domestic product (GDP) in Algeria using time-series data from 1980 to 2017.

the study has employed the autoregressive distributed lag (ARDL)-bounds testing cointegration.

the model is specified with six macroeconomics variables, namely, (GDP), broad money supply (M2), discount rate (DR), inflation rate (INF), real exchange rate (reer), (gov).

the findings reveal that there is statistically significant positive relationship between money supply and GDP both in short run and long run.

where the central banker in Algeria should maintain consistency and follow “the Taylor rule” to allow (M2) increase at a steady rate keeping pace with the economic growth.