The purpose of this paper is to investigate factors affecting capital formation in selected Arab Countries. These countries are Bahrain, Egypt, Jordan, Kuwait, Morocco, and Saudi Arabia. It adopts neoclassical monetary growth models derived from Sidrauski model to examine the substitution relationship between money and capital. Further analysis has been conducted to examine the complementarity relationship between money and capitalthat was driven based on Mackinnon argument. In his argument Mackinnon objected the perfect substitution relationship between capital and money in developing countries, where financial markets are immature and inefficient. Accordingly, investors will depend on self financing, where savings are held in money. As a result, an increase in money demand will contribute in increasing capital. Moreover, Mackinnon emphasizes the role of government expenditure in improving capital stock. The analysis has been performed with unbalanced pooled data, and models have been tested by using the GLS method considering fixed and random effects. The results indicate that self-financing and government expenditure play a significant role in improving capital stock. These results are consistent with Mackinnon argument and might explain the contribution of money supply in improving capital stock in developing countries.
| Published in | International Journal of Business and Economics Research (Volume 8, Issue 2) |
| DOI | 10.11648/j.ijber.20190802.12 |
| Page(s) | 50-57 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2019. Published by Science Publishing Group |
Growth Model, Capital Formation, Inflation Rate, Interest Rate, Money Supply
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APA Style
Osamah Bin Tareef, Walid Shawaqfeh. (2019). Capital Formation in Monetary Growth Models: An Empirical Study of Selected Arab Countries. International Journal of Business and Economics Research, 8(2), 50-57. https://doi.org/10.11648/j.ijber.20190802.12
ACS Style
Osamah Bin Tareef; Walid Shawaqfeh. Capital Formation in Monetary Growth Models: An Empirical Study of Selected Arab Countries. Int. J. Bus. Econ. Res. 2019, 8(2), 50-57. doi: 10.11648/j.ijber.20190802.12
AMA Style
Osamah Bin Tareef, Walid Shawaqfeh. Capital Formation in Monetary Growth Models: An Empirical Study of Selected Arab Countries. Int J Bus Econ Res. 2019;8(2):50-57. doi: 10.11648/j.ijber.20190802.12
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Download@article{10.11648/j.ijber.20190802.12,
author = {Osamah Bin Tareef and Walid Shawaqfeh},
title = {Capital Formation in Monetary Growth Models: An Empirical Study of Selected Arab Countries},
journal = {International Journal of Business and Economics Research},
volume = {8},
number = {2},
pages = {50-57},
doi = {10.11648/j.ijber.20190802.12},
url = {https://doi.org/10.11648/j.ijber.20190802.12},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20190802.12},
abstract = {The purpose of this paper is to investigate factors affecting capital formation in selected Arab Countries. These countries are Bahrain, Egypt, Jordan, Kuwait, Morocco, and Saudi Arabia. It adopts neoclassical monetary growth models derived from Sidrauski model to examine the substitution relationship between money and capital. Further analysis has been conducted to examine the complementarity relationship between money and capitalthat was driven based on Mackinnon argument. In his argument Mackinnon objected the perfect substitution relationship between capital and money in developing countries, where financial markets are immature and inefficient. Accordingly, investors will depend on self financing, where savings are held in money. As a result, an increase in money demand will contribute in increasing capital. Moreover, Mackinnon emphasizes the role of government expenditure in improving capital stock. The analysis has been performed with unbalanced pooled data, and models have been tested by using the GLS method considering fixed and random effects. The results indicate that self-financing and government expenditure play a significant role in improving capital stock. These results are consistent with Mackinnon argument and might explain the contribution of money supply in improving capital stock in developing countries.},
year = {2019}
}
TY - JOUR T1 - Capital Formation in Monetary Growth Models: An Empirical Study of Selected Arab Countries AU - Osamah Bin Tareef AU - Walid Shawaqfeh Y1 - 2019/04/29 PY - 2019 N1 - https://doi.org/10.11648/j.ijber.20190802.12 DO - 10.11648/j.ijber.20190802.12 T2 - International Journal of Business and Economics Research JF - International Journal of Business and Economics Research JO - International Journal of Business and Economics Research SP - 50 EP - 57 PB - Science Publishing Group SN - 2328-756X UR - https://doi.org/10.11648/j.ijber.20190802.12 AB - The purpose of this paper is to investigate factors affecting capital formation in selected Arab Countries. These countries are Bahrain, Egypt, Jordan, Kuwait, Morocco, and Saudi Arabia. It adopts neoclassical monetary growth models derived from Sidrauski model to examine the substitution relationship between money and capital. Further analysis has been conducted to examine the complementarity relationship between money and capitalthat was driven based on Mackinnon argument. In his argument Mackinnon objected the perfect substitution relationship between capital and money in developing countries, where financial markets are immature and inefficient. Accordingly, investors will depend on self financing, where savings are held in money. As a result, an increase in money demand will contribute in increasing capital. Moreover, Mackinnon emphasizes the role of government expenditure in improving capital stock. The analysis has been performed with unbalanced pooled data, and models have been tested by using the GLS method considering fixed and random effects. The results indicate that self-financing and government expenditure play a significant role in improving capital stock. These results are consistent with Mackinnon argument and might explain the contribution of money supply in improving capital stock in developing countries. VL - 8 IS - 2 ER -
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