EXAMINING HOW MONETARY POLICY EFFECTS THE PRODUCTIVITY GROWTH IN SOMALIA

Productivity and output growth are influenced by money factors including technological progress, capital accumulation and population growth. Macroeconomic policies especially monetary policy effect of these factors interacts to each other. The purpose of this study is to evaluate the impact of monetary policy on output growth in Somalia in the light of monetarist view using the equation of exchange proposed by Irvin Fisher. The study adopts ordinary least square (OLS) technique and also uses data obtained from World Bank, SESRIC, and World development indicators during 1970-2010. GDP is measured economic growth, is dependent variable. Money supply, inflation, exchange rate are independent variables the findings of this study reveal that there is a positive significant relationship between money supply and economic growth, while a negative significant relationship between inflation and exchange rate on economic growth.