期刊名称：Journal of Emerging Trends in Economics and Management Sciences
电子版ISSN：2141-7024
出版年度：2014
卷号：5
期号：5
页码：449-456
出版社：Scholarlink Resource Centre
摘要：Few are the econometric studies which have examined the relationship between budget deficit andmacroeconomic variables exchange rate(ER), consumer price index(CPI), economic growth(GDP),and moneysupply(M3). This study examine empirical relationship among exchange rate, consumer price index, economicgrowth, money supply and budget deficit in United Arab Emirates (UAE) over the period 1985-2011.The datawhere sourced from Central Bank of Emirates(various issues), IFS , IMF and Arab Monetary Fund(AMF).inorder to clarify whether exchange rate ,money supply, consumer price index cause budget deficit or vise- versa.a cointegration approach and Variance Error Correction Models (VECM) is developed.Moreover,Grangercausality technique is used to assess the direction of the causality The findings provide evidence to support thevariables under study are cointegrated and there is no directional causality between budget deficit and nominaleffective exchange rates. the results from variance decomposition method. GDP and exchange rates produce19.24% and 68.23 of variance in budget deficit at the end of ten periods, interestingly, the effect of GDP on thevariance of money supply has been decreasing for the first five time periods and remains constant for the nextfive periods. The predictions will help the policy makers as well as quantitative analysts in determining thestance of monetary policy as well as fiscal policy. Policy makers, economists and analysts may take a cue fromthese studies, and have to necessarily keep themselves watchful of the changes in the macroeconomicfundamentals. However, we have not observed any significant relationship between budget deficit and GDP,Money supply & consumer price index
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