Title:
TESTING NEUTRALITY OF MONEY BY EXAMINING THE RELATIONSHIP BETWEEN MONEY, PRICE AND OUTPUT IN SOMALIA

Authors:
Abdinur Ali Mohamed and Sid-Ali Ahmed Hussein

Abstract:
In this paper, the relationship between money supply, price and output in Somalia have been examined. The study is based on the well-known quantity theory of money applying the OLS method. Annual time series data of the study variables for the period 1970-2010 were used in the analysis. The results indicate that there is positive relationship between money supply and output growth which is consistent theoretically with the monetarist’s view. Whereas the price level (inflation) affects the output negatively in Somalia.