Independence of Monetary Policy under Fixed Exchange Rates: The Case of Saudi Arabia.
K., Akkina, . 2003
This study specifies a modified version of the monetary approach to the balance of payments (MABP) model with free capital flow and fixed exchange rates for Saudi Arabia, and tests the independence of monetary policy of its central bank using annual data from 1960 to 1994. Further, capital flight and speculative inventory behavior of importers of consumer and capital goods in Saudi Arabia are also tested to the expected exchange rate depreciation during the periods of exchange turmoil against the riyal. The results of this study indicate that Saudi Arabian Monetary Authority has at best a weak control on its money supply which is in accord with one of the predictions of MABP theory. Further, the study found little support to the speculative inventory behavior of the importers of consumer and capital goods in Saudi Arabia against exchange rate depreciation of the riyal. However, the results suggest that the expected change in exchange rate depreciation has a positive and a significant impact on capital flight in Saudi Arabia.
In this paper we investigate the causality and co-integration between inventory investment and various types of Saudi Arabia’s GDP. Saudi Arabia is an oil-based economy; therefore its total GDP…
This study specifies a modified version of the monetary approach to the balance of payments (MABP) model with free capital flow and fixed exchange rates for Saudi Arabia, and tests the…
Using A vector auto-regression approach (VAR), this paper mainly studys the effect of the government domestic expenditure, and other variables, on the behavior of the private consumption in Saudi…