The Impact of Monetary and Fiscal Policy on GDP In Yemen: An Econometric Study for the Period (2000-2022)

Abstract

This study aims to examine the impact of monetary and fiscal policies on gross domestic product (GDP) in Yemen during the period 2000–2022. The independent variables include broad money supply (M2), total public expenditure, total public revenue, and the trade balance, while GDP represents the dependent variable. The study adopts a descriptive-analytical approach, utilizing time-series descriptive statistics and the Autoregressive Distributed Lag (ARDL) model to test the hypotheses using EViews13. The findings reveal a significant long-run relationship between monetary and fiscal policies and GDP. Approximately 74% of the variation in GDP is explained by the independent variables, while 26% is attributed to other factors not included in the model. The results indicate a positive impact of money supply, public revenues, and the trade balance on GDP, whereas public expenditure exhibits a negative effect.