The impact of monetary policy on economic growth in Malaysia / Nurul Izzati Ismail

This research investigates the impact of monetary policy on economic growth in Malaysia. The monetary policy plays an act role in a country's economic growth if it is implemented effectively to maintain price stability and to keep inflation rate at minimum level. Such goals are achieved through a process by which monetary authority of a country controls the supply of money, availability of money, and cost of money or interest rate. Monetary policy depends on the relationship between interest rate in an economy and the total money supply. Monetary authority uses variety of tools to control one or both variables to influence outcomes, such as economic growth, inflation, exchange rate with other countries and unemployment. There is an enormous effect of monetary policy on economic growth of the country. The variables that used are gross domestic product (GDP) per capita, interest rate, inflation rate, money supply and real exchange rate. In this regard variables have been studied to prove the hypothesis. The data for the study was on time series covering economic indicators. This research focused on secondary type of data. The study covered a period between 1988 to 2016 has been used for driving the result. To determine the relationship between two variables, regression analysis and times series method will be using to conduct the research. The study proves that money supply and real exchange rate affect the GDP per capita.