The Effect Of Monetary Policy In Driving The Economic Growth Of Pakistan

Abstract

The state bank of Pakistan conducts the monetary policy for minimizing up and down in the economic system. The variables of monetary policy are factor in to impact the country decisions of general public. Because when the monetary policy tools interest rate and money supply are increased or decreased, the perception of people are changed from their saving to investment and demand of products. And through these tools the targets of monetary policy: the price stability of consumer goods, redundancy, trade and industry growth and inflation are achieved. The Ordinary Least square is used in study for concluding the GDP growth rate affection by Monetary Policy and found in our research we have analyzed that the Economic Growth of Pakistan supply of Money M2 (Broad money) by the influence impact of significantly and also Inflation rate’’. It is estimated that current supply of money strongly depends previous period of money supply. The timeframe of date collected on monthly base and period of data started from 2011 to 2024. Broad money is depending on effect of monetary policy on the economic growth of country. The empirical results confirm that the economic growth is changes in money supply and inflation.