JSPES, Vol. 44, No. 3-4 (Fall-Winter 2019)
pp. 283-297

Threshold Effects of Money Growth in the Nexus Between Inflation and Economic Growth: The Case of Qatar     

Noura Abu Asab
Department of Economics, School of Business, University of Jordan, Amman, Jordan

The study examines the threshold effect of broad money growth in the relationship between inflation and economic growth in the short run for Qatar. Using quarterly data over the period of 2004 to 2017, the model specification detects the existence of one threshold level of money growth at 2.9% where the sum square of residuals is minimized. Below this level, the nexus appears significantly positive. However, above the threshold rate, the nexus flattens out as the effect of inflation on economic growth approaches zero and turns insignificant. Based on the results, inflation is a monetary phenomenon and the Qatari Central Bank should control the growth of money supply below 2.9% to maintain price stability and robust economic growth.