ASSIGNMENT OF STATISTICS

AISHA (P1256007) AMNA ZAMEER (P1256012) MADIHA NAZ (P1256086) ANEEQA AREEBAH (P1256016)

ECONOMIC GROWTH VS MONETARY POLICY: SUBMITTED TO: MAAM RABIA SHAKIR SUBMITTED DATE: 07-10-2013 GROUP #: 07 DEPTT: ECONOMICS (M.A.prev.)

UNIVERSITY OF KARACHI

CONTENTS:

1: INTRODUCTION 2: REVIEW OF LITERATURE 3: METHODOLOGY 4: REGRESSION ANALYSIS 5: CO VARIANCE ANALYSIS 6: CONCULUSION 7: RECOMMENDATION 8: BIBLOGRAPHY

UNIVERSITY OF KARACH

INTRODUCTION:
Pakistan is a developing economy that has been facing many types of problems and issues of instability in our country; high inflation rate because of money supply and other factors. In other factors political issues has been included. Because of having devolving country it has to face these all crises inflation rate also affect the main factor of any economy that is growth rate inflation rate effect growth rate .our research topic is about that how any economy or its growth. Rate affected by monetary policy indicators. The data collected is from 1981 to 2010 which shows an overall increase but it is increasing with decrying rate we also have noticed that in 1997 growth rate has lowest value. From 1992 the growth rate starts declining and at 2004 it start maintain again its value. Monetary indicators inflation rate, money supply, exchange rate, foreign direct investment (FDI) affect the economy growth rate. "Monetary policy is the exercise of central bank control over the money supply as an instrument to achieving the objectives of economy" (A.J Shapiro) Monetary policy as "the management of the expansion and contraction of the volume of money in circulation for the explicit purpose of attaining a specific objective such as full employment."(R.P Kent) In Monetary policy if we take the example of tight monetary policy and the interest rate get high, at the result of that money supply in market will decreases. Monetary policy is control by State bank of Pakistan this is the bank of government. State bank apply tight monetary policy when it wants to maintain inflation in economy, because of having impact on GDP growth, we know that no any country can grow with having high level of inflation .GDP growth is the main component or objective of monetary policy. As money circulation in economy increases because of printing of money from stat bank it also affect the country exchange rate as we compare our Pakistans currency with dollar it has very low worth as compare to dollar and it has been losing its real worth.

HISTORY OF MONETARY POLICY:

A history is complete study of gradual development of MP practical by Federal Reserve since the base a century ago. Hetzele provide a new technique about MP during his Chicago training but problems was that MP need great knowledge about itself. Because of Robert Hetzele view on MP Central Bank chairman achieve success Hetzele describe 3 type of monetary experiment.
Before independence 14th August 1947 British Col Era central bank of India for reserve bank for subcontinent British Gov. commission divided the reserve bank of Indians reserves between Pakistan and India 30 % for Pakistan and 70% for India on December 1948 and Pakistan faces 230illion loses Quaid Azam rapidly took steps to establish the State Bank of Pakistan in May 1948, These were empower in Jun 1948 and State Bank of Pakistan began his work on July 01 1948. The work of state bank regulates the bank notes keeping of reserve with a view to securing monetary stability in Pakistan in

3 currency and credit system operation. 1965 when \State Bank of Pakistan act came state bank work circle got bigger size. It required the state bank to regulate the M and credit system of Pakistan and with secure Monetary stability and efficient productivity .In Feb 1994 State Bank was giving full authority and it got bigger in Jan 21 1997 by issuing govt 3rdgovt. Amendments ordinance approved by parliament in May 1997 in which 1956, 1962 and 1974 acts are composed and it give the state bank Full rights to regulate the bank sector to conduct an independent monetary policy and set on limit on govt borrowing from state bank of Pakistan The State Bank also perform the key role to achieve the macroeconomic goal Govt official all over the world are asking should monitoring rules are effecting in an historical analysis of monetary policy rules ( NBEK working paper no 6768| It associate John Tylor research about the history of US monitory policy the rule describe the new official should adjust tylor also talks how a monetary policy rule effect on inflation and real output but sleazily short term interest rates may help flatin economy after the renaming of short term rate from 1879 present he concludes that the dramatic changes in US it also together with economic stability since 125 years from 1879 to 1914 the US was on the gold inflation. The 1980s and 1990s have been a time of better than before about inflation and economic fluctuation seen the result of simple monetary policy with actual charges in the federal funds rate during the era shows that interest rate were Ander range dictated by Taylors simple monetary rule 1960s and 1970s in both short term interest rates no responded too much and not early to changes in inflation and real output. Monetary policy indicators helps to get the target of state bank i.e. economy growth, inflation, exchange rate, federal direct investment, interest rate.

Economic Growth:
By adopting suitable monetary policy a government tries to achieve economic development. As a result of economic development there will be proper utilization of natural and human resources, more capital formalities means more employment increase, more employment increase

means income along with an increase so its increase standard of living.

Inflation:
It is an increase in the cost of commodities that are vital for humans to live or a decrease in the value of money so that it takes more currency to buy the same goods and services it did in the past. Higher rates of inflation are going to have adverse
effects on the economic growth. There is less economic growth when there is high inflation usually.

Foreign Direct Investment:

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

Interest rate:
Interest is charged by lenders as compensation for the loss of the asset's use. In the case of lending money, the lender could have invested the funds instead of lending them out. With lending a large asset, the lender may have been able to generate income from the asset should they have decided to use it themselves

Money supply (M2):

An increase in the supply of money typically lowers interest rates, which in turns generates more investment and puts more money in the hands of consumers. Businesses respond by ordering more raw materials and increasing production. The increased business activity raises the demand for labor. The opposite can occur if the money supply falls or when its growth rate declines.

Exchange rate:
The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.

REVIEW OF LITERATURE:
*In the research paper bank applied the rate in monetary policy which have been introduced with the name of "Taylor rule". This was introduced in 1993."In this approach interest rate should change according to the change in inflation rate and production gap." interest rate takes here as a main or major component, most of the countries set or react according to inflation rate or exchange rate. Central bank set their targets after observing the inflation and exchange rate behavior. Some country's monetary policy also affected by other factors .there are some central banks which provides rules and method to set the interest rate and help out for achieving the monetary policy objectives.one of the important objective is the price stability in country and other also have impotence.

*The paper shows a review that how the decision of monitoring agencies effect on GDP and how
to achieve the goals of increase the standards of peoples welfare. The merge of political and economic credibility study of this policy acquire more attention of policy makers. Organize monetary policy with balanced adjustments reflects relationship with reliable variables. The aim

and target of study are to point out the independent exist routing monitory policy and economic growth the research is important according to both point of views theoretical and practical. The special attention is paid to monitory policy to keep in view affected consequences from the possible policy changes Central banks objectives are to strengthen the internal and external value of monetary policy.
*In this paper author highlighted the several issues. Monetary reforms moved to improve policy

transparency so central bank decides the rules of interest rates and also monetary policy focus on the price stability. The experiment proved that the interest rate reaction to the inflation greater than other. Whenever interest rate decline its create the inflation. *The research paper introduced the agnostic method about the effects of monetary policy, restriction on the prices, no borrowed reserves and federal funds rate in answer to monetary policy shocks , but restriction are not to be applied on real GDP .It implies that the real GDP have an ambiguous effect of Contractionary monetary policy shocks and it goes up and down by more than 20% with 3/4 probability and monetary policy shocks have prediction error variance of real growth, which is less than 25% and mostly it may account less than 3%. In Contractionary monetary policy shocks, GDP deflators decreases with decreasing rate and the commodity price index decrease with increasing rate. In error variance of federal funds rate having small fraction in monetary policy shocks. There are 3/4 variation in prices, in addition, for a year , general price level goes gradually thats why monetary policy shocks have ambiguous real effects and become neuter, all these conditions shows the result which was found in the empirical VAR literature. It does not include this ambiguous result about output. According to VAR literature, Contractionary monetary policy shocks does not have effects on real GDP, so the person may confused in between conventional view and VAR literature. I n this paper, important assumption in the views of VAR and conventional, is that the impact of the real GDP could not be zero. In the light of this research paper that changes or variation in monetary policy tells that these entire variables have less fraction of the variation. In the perspective of this paper, good monetary policy must be predictable policy. In this point of view monetary policy of U.S is being successfully applied. *According to the Nobel Laureate Robert Lucas that if we think about output growth so we cannot think about anything else. He said this quotation because of, over the long time period, when growth rate changes with small ratio so it leads to large inequality in income level. If we look New Zealands economy so its growth experience, from last 40 years, it indicates about importance of low differences in average growth rate. In 1960, New Zealand has sixth highest rank in the world about per capita income. And other countries economy was increasing with increasing rate and overlap with the New Zealands economy. In the result of this, New Zealand got twentieth rank in per capita income and got 60% per capita income level of United States. When we talk about economic growth and

economic development so both are very complex processes and it gives a large number of important factors. Conway and Orr (2000) gave an outline of the event the effected New Zealands output growth from past half century and economic reforms from last two decades. Reserves Bank Monetary Policy can be played the important role to improve economic condition of New Zealand. Consensus view says if we control the prices and make possible less variation of macroeconomic variable so stabilized economic condition can be achieved, and these are all very important indicators for monetary policy. Christie Smith analyzed the causes of growth, theories and their implementations. He wants to check the Long Run Effect of Monetary Policy on the Real Economy. He said, sustainable effect can be achieved on real per capita income growth by Monetary Policy. In growth rate substantial differences may be occur due to sustained differences. If per capita income of New Zealand, therefore, increases rapidly as compare to richer country so per capita income of New Zealand is changed and come in richer country list. Accumulation of capital, labor force growth, accumulation of knowledge and technology. * All the economies theories and laws tell that, central bank target or goal is reduction in inflation rate or stability of prices in economy. Monetary theory goal, actually, wants to get low inflation rate and stability of prices but if we go to economists point of view , they indicates that we get the high inflation rate due to monetary policy and it would not be effect on growth. It cannot be possible in short run period but in long run period. The author of research paper Bojan Dimitrijevid, and Ivan Lovre wants to know investigate that there is any relationship between the growth in long term monetary policy instruments. If we consider only on growth in long run so there would not be any effect of inflation in this following points: It would have cheaper or less expansion resources for development and growth for any developing country. It would also be the reason for having more investment in any country (FDI) and there would be the low need of foreign exchange rate.

*In this research we discover the consequences of monetary policy and economic growth along with public welfare price stability in tight monetary policy price level does not go up. There is a disagreement between economic on the impact of monetary variable on the real variables according to the some economists the changes in money volume impact only the nominal production and does not effect on real variables as like employment real production and economic growth the other things Monterey variables can also influences the real ones. The current research investigates the difference economic theories and applies the existing

information and statistics. This paper calculates the relationship among real economic variable and classic growth.
*In this paper author highlighted the several issues. Monetary reforms moved to improve policy

transparency so central bank decides the rules of interest rates and also monetary policy focus on the price stability. The experiment proved that the interest rate reaction to the inflation greater than other. Whenever interest rate decline its create the inflation. *Abdul Qayum attempts to examine the relation between the excess money supply growth and inflation in Pakistan in his article, Money, Inflation and Growth in Pakistan (2006). The result show the positive relationship, money supply firstly effect on GDP then inflation. When money supply raises its increase the growth of G.D.P but also create the inflation. The main point is that the excess of money supply raised the inflation. The inflation of Pakistan can be controlled if State Bank of Pakistan tights the monetary policy. The article on the whole concludes that inflation in Pakistan is by no doubt a monetary phenomenon. *WaqqasQayyum and Dr. Wasim Shahid Malik attempts to examine the Measuring the Stance of Monetary Policy for Pakistans Economy. The result show that when interest rates decrease its increase the inflation. Due to low rate of interest people borrowing loan more so demand of money increase but the supply is constant, in that case its increase the cost of commodities which create the inflation. In this review we also get that inflation in Pakistan is by no doubt a monetary phenomenon.
*Javad Taherizadeh Anaripour attempts to examine The Relationship between Interest Rate and

Economic Growth. The result shows the negative relationship between interest rate and economic growth. Low rates of interest maintain high economic growth and high rates of interest rate maintain low economic growth. *UME-AMEN and IRFAN HAMEED attempts to examine The IMPACT OF MONETARY POLICY ON GROSS DOMESTIC PRODUCT (GDP). The is no doubt that G.D.P is affected by monetary policy, the study and practical proved that money supply has great relationship on GDP and interest rate has minor relationship on GDP. Low rate of interest create the economy growth and high rate of interest create inflation. The relationship between inflation and economic growth is nonlinear.

METHODOLOGY:
Research Type
In order to understand the impact of inflation on the economic growth of Pakistan, quantitative research is carried down.

Data Type
Secondary data is collected from various websites and data bases. YEARS = FROM 1981 TO 2010 GDP = CURRENT U.S$

FOREIGN DIRECT INVESTMENT (FDI) = CURRENT U.S$. INFLATION RATE = PERCENTAGE (%) MONEY SUPPLY (M2) =CURRENT LCU OFFICIAL EXCHANGE RATE = AVERAGE U.S$

Source of Data
In order to collect the secondary data, the websites of WORLD BANK, INDEX MUNDI have been used.
data.worldbank.org/ www.indexmundi.com/

Techniques
Regression and covariance analysis will be used as the statistical technique in this research after gathering secondary data. Once the data have been collected results will be analyzed through regression analysis and covariance analysis.

Sample
Data is collected from 1981 -2010 for all the variables from different web sites.

Theoretical Framework

Functional form=f (x1, x2, x3, x4)

Economic Growth=f (exchange rates, Inflation, FDI, Money supply)

Multiple Regressions would be run to see the relationship of various variables and to identify the variables which are significant affecting the dependent variable.

Y= o+ 1X1+ 2X2+ 3X3+ 4X4 o,1, 2, 3 & 4 are the parameters of multiple regression model and these are not equal tozero. REGRESSION ANALYSIS:
Multiple Regressions:
Multiple regression model is one in which regress ant (y) depend on two or more repressor (x), the simplest form of multiple regression model is three variables regression model. Where Y is dependent variable and X2 and X3 are explanatory variable, is the error term; 1 and 2 are partial regression coefficient.

H=HYPOTHESIS H0=NULL HYPOTESIS

Tcal >Ttab = rejection of H0 (significant) Tcal<Ttab = acceptance of H0 (insignificant) REGRESSION TABLE:
Dependent Variable: Y Method: Least Squares Date: 10/03/13 Time: 06:35 Sample (adjusted): 1981 2010 Included observations: 30 Variable C X1 X2 X3 X4 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient 1.99E+10 4.415778 6.79E+08 0.017795 3.25E+08 0.993904 0.992928 3.68E+09 3.38E+20 -700.5837 1018.981 0.000000 Std. Error 2.72E+09 0.799301 1.96E+08 0.001473 87259965 t-Statistic 7.317981 5.524546 3.466994 12.08267 3.728823 Prob. 0.0000 0.0000 0.0019 0.0000 0.0010 7.08E+10 4.37E+10 47.03891 47.27244 47.11362 2.062462

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat

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RESULTS:

C=intercept=0 Tcal >Ttab = rejection of H0 (significant)

(7.317981) > (2.048) =rejection of H0 (significant) C is the intercept it has relationship with dependent variable Y (GDP) because we have calculated T-statistic value and also t-tabulated .when null hypothesis (H0) rejected it means answer is significant that indicates C has the relationship with GDP.

X1=FDI Tcal >Ttab = rejection of H0 (significant)

(5.524546) > (2.048) =rejection of H0 (significant) X1 is the foreign direct investment (FDI) it has relationship with dependent variable Y (GDP) because we have calculated T-statistic value and also t-tabulated .when null hypothesis ( H0) rejected it means answer is significant that indicates X1 has the significant relationship with GDP.

X2=Inflation rate Tcal >Ttab = rejection of H0 (significant)

(3.466994) > (2.048) =rejection of H0 (significant) X2 is the Inflation rate it has relationship with dependent variable Y (GDP) because we have calculated T-statistic value and also t-tabulated and Tcal value is greater than Ttab and null hypothesis (H0) rejected it means answer is significant that indicates X2 has the significant relationship with GDP and it affects it.

X3=Money Supply (M2): Tcal >Ttab = rejection of H0 (significant)

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(12.08267) > (2.048) =rejection of H0 (significant) X3 is the Money Supply (M2) and it has effect on GDP because we have calculated T-test results and t-calculated answer is more than t-tabulated thats mean answer is significant and it has positive relationship.

X4= (Exchange rate): Tcal >Ttab=rejection of Ho (significant) (3.728823) > (2.048) =rejection of H0 (significant)
It has relationship with dependent variable Y (GDP) because we have calculated T-statistic value and also t-tabulated .when null hypothesis ( H0) rejected it means answer is significant that indicates X4 has the significant relationship with GDP.

R-SQUARED:

R value is 0.993904. So thats mean There is 99% variation in GDP due to independent variables
and 1% due to other factors.

PROBABILITY:
There all the values which we have taken as T-tabulated taken on the 95% confidence Interval. 5%is the remaining part of 95% and its shows the value of alpha 0.05 i.e. 5%. Probability < alpha = significant Probability > alpha= insignificant

C X1 X2 X3 X4

(0.0000) < (0.05) = (significant) (0.0000) < (0.05) = (significant) (0.0019) < (0.05) = (significant) (0.0000) < (0.05) = (significant) (0.0010) < (0.05) = (significant)

All the values are less then value of alpha (0.05) that shows that all the answers are significant and all variables have strong association.

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F-STATISTICS:
F-test also shows the significance of the multiple regressions. With having the same rule if calculated value is greater than tabulated value null hypothecs Ho rejected and this shows the significance of the variables.

Tcal >Ttab=rejection of Ho (significant)

1018.981> 2.92= rejection of H0 (significant) F-tabulated value is 2.92 and calculated value is 1018.981 calculated values are greater than tabulated value that shows that answer is significant.

Regression Summary:
In Multiple Regression Model, we have GDP as Dependent variable and FDI, Money Supply, Exchange Rate, Inflation Rate as Independent variables. Our hypothesis is ALL INDEPENDENT VARIABLES EFFECTS ON DEPANDENT VARIABLE(Y). For rejection of null hypothesis (H0), we calculated T-Statistics, R, Adjusted R-squared, F-Statistics (WITH THE HELP OF E-VIEWS-7 SOFTWARE) & T-Tabulated (USING STATISTICS BOOK i.e. STATISTICAL TECHNIQUES IN BUSINESS & ECONOMICS by Douglas A.Lind) values of all independent variables. If Tcal is greater than Ttab so Null Hypothesis (H0) rejected and the result will be Significant otherwise it will be insignificant when Null Hypothesis (H0) accepted in the condition Tcal is less than Ttab. Here we have all values of T-Statistics, R, Adjusted R-squared, F-Statistics is greater than Ttab values.it means the rejection of Null Hypothesis(H0)& result is Significant so we can say that all independents variable have an effect on dependent variable i.e. GDP(Y).

COVARIANCE ANALYSIS:
Covariance:
It is a degree to which the value of a dependent variable and an associated independent variable moves in tandem. Positive covariance means they move together (vary directly), negative covariance means they move in opposite directions (vary inversely).

Tcal >Ttab = rejection of H0 (significant) Tcal<Ttab = acceptanceof H0 (insignificant)

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COVARIANCE TABLE:
Covariance Analysis: Ordinary Date: 10/03/13 Time: 06:36 Sample (adjusted): 1981 2010 Included observations: 30 Balanced sample (list wise missing value deletion) Correlation t-Statistic X1

X1 1.000000 ----0.288229 1.592757 0.795617 6.949512

X2

X3

X4

X2

1.000000 ----0.355573 2.013076 0.205664 1.112044 0.387450 2.223903 1.000000 ----0.916847 12.15187 1.000000 ----0.915483 12.03976 1.000000 -----

X3

* * *

X4

0.643586 4.449508

* *

0.831721 7.927056

0.992115 41.88632

* =SIGNIFICANT VALUES
RESULTS: COVARIANCE (X2WITH X1):

We take covariance to see the correlation between the two variables as we take here X2 (inflation) with X1(FDI) Tcal >Ttab=rejection of H0 (significant) Tcal<Ttab = acceptance of H0 (insignificant) 1.592757< 2.048= acceptance of H0 (insignificant) In this we have less correlation between the FDI and inflation rate because the result of Ho is accepted and the result is automatically rejected or insignificant. COVARIANCE(X3WITH X1& X3 WITH X2):

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We take covariance to see the correlation between the two variables as we take here X3(money supply) with X1 (FDI) & X3(money supply) with X2 (inflation rate). Tcal>Ttab = rejection of H0 (significant) Tcal<Ttab = acceptance of H0 (insignificant) X3 with X1 values
X3 with X2 values (6.949512) > (2.048) =rejection of H0 (significant) (2.013076) < (2.048) =acceptance of H0 (insignificant)

Between X3 and X1, we have strong correlation that interprets money supply and FDI has strong correlation or in other words they have positive relationship. Covariance between the variables X3(M2) and X2(inflation rate) is less or insignificant because its T-calculated value is less than T-tabulated value.

COVARIANCE(X4WITH X1 , X4 WITH X2& X4 WITH X3):

We take here variables to see the relationship between them, variables are X4(exchange rate) with X1(FDI) and also X4(exchange rate) with X2(inflation rate) and X4(exchange rate) withX3 (money supply) has relationship with all of them, X4 has positive or strong correlation with X1(FDI) and X3(money supply) but not with X2(inflation rate). Tcal>Ttab =rejection of H0 (significant) Tcal<Ttab = acceptance of H0 (insignificant) X4with X1 values X4 withX2 values X4 with X3 values (4.449508) > (2.048) =rejection of H0 (significant) (1.112044) < (2.048) =acceptance of H0 (insignificant) (12.15187)> (2.048) =rejection of H0 (significant)

COVARIANCE OF GDP(Y WITH X1 , Y WITH X2 , Y WITH X3 & Y WITH X4):

We take here GDP(Y) with FDI (X1), INFLATION RATE(X2), MONEY SUPPLY i.e. M2(X3), EXCHANGE RATE(X4) to check the relationship of GDP with all monetary policy indicators. Tcal>Ttab =rejection of H0 (significant) Tcal<Ttab = acceptance of H0 (insignificant) Y with X1 values (7.927056) > (2.048) =rejection of H0 (significant)

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Y with X2 values Y with X3 values Y with X4 values

(2.223903) > (2.048) =rejection of H0 (significant) (41.88632)> (2.048) =rejection of H0 (significant) (12.03976)> (2.048) =rejection of H0 (significant)

we take result of GDP and analysis the result of monetary policy indicators .when we find out the relation between all of them FDI,INFLATION RATE,M2 and EXCHANGE RATE, all have strong and positive relation with the GDP, that indicates that all monitory indicators effect the economy growth or GDP growth.

Covariance Summary:
In Covariance Analysis, we want to check the relationship between GDP and all monetary policy indicators (FDI, INFLATION RATE, M2, and EXCHANGE RATE) to each other. If we see the relationship of GDP with FDI, INFLATION RATE, M2, and EXCHANGE RATE so there is strong and significant relationship because it rejects the Null Hypothesis (H0) and makes significant value .But the relationship between INFLATION RATE(X2) with FDI (X1), MONEY SUPPLY(X3) with INFLATION RATE(X2) & EXCHANGE RATE(X4) with INFLATION RATE(X2) have insignificant result, because, in these relationship Tcal is greater than Ttab so this is the acceptance of Null Hypothesis(H0).

CONCLUSION:
The research that we have conducted basically enlightens the effect of inflation on economic growth along with three more variables; Interest rates, Growth of money supply and FDI. Regression is run on the variables and the results show that three of the four variables are holding significant affect whereas one of the variables, i.e., FDI is insignificant. Moreover, the results are analyzed looking at the T-Statistics and conclusion is made on the basis of this. In addition, the Adjusted R square shows a very favorable value of 82.917%. Data of 10 years had been used i.e. from 1997-2007. Stat graphics is used to run the analysis. This study displays different important and significant factor that have an impact on the economic growth of Pakistan. Inflation is the root of all the problems. The study finds the reasons negatively and positively. The relation between all of them FDI, INFLATION RATE, M2 and EXCHANGE RATE, have strong and positive relation with the GDP, that indicates that all monitory indicators effect the economy growth or GDP growth.

RECOMMENDATION:
As we have seen that these all monetary indicators has effect on economy growth but there are some more reasons because of that any country's economy can be affected firstly the country's political stability and also the environment of the country they could also change the economy growth or any country cant grow without having country situation stabilization.

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Second there could be more grow in GDP if Government invest their money more in development plants instead of private expenditures, there would be two positive effects on economy employment will increase and also the consumer purchasing power and it maintain the automatically inflation rate.

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