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)

Abstract

Abstract This study aims to measure the effect of money supply on the rate of interest and gross domestic product (GDP) of the private sector in Jordan and show the effect of money supply on domestic product in order to determine the effect nature of narrow and expanded money supply of Jordanian economy. The study uses a fully modified ordinary least squares (FM-OLS) method depending on time data for the period (1990–2019). The results of the estimation show that there is a positive significant effect of narrow money supply on real GDP of the private sector. In addition, it shows that there is a negative significant effect of real interest rate on GDP of the private sector. Also, it shows that there is a statistical insignificant effect of real domestic savings on real domestic product.