Macroeconomic Relations in the Islamic Economy: Experimental Case Study of Malaysia, 1970–85
In Chapter 6, the system of equations (6.18)–(6.25) and (6.26)–(6.28) showed the general forms of relations among critical macroeconomic variables in the Islamic economy. These forms were then shown to result in the expenditure sector equation and the monetary sector equation. It was indicated also that these general forms of equations could be modified by adding or dropping some variables, and by building in different time-lag structures to the variables. The equations could be expressed in alternative linear forms, such as the log-linear form. The expected signs of the regression coefficients were indicated. These signs are important in showing the direction of change between selected variables. In all these, the central objective was to note the influence that the rate of profit (replacing the rate of interest) and zakah expenditure, as macroeconomic variables, would have on the other variables of the model system. We now turn to an empirical examination of these relationships.
KeywordsMoney Supply National Income Money Demand Estimate Regression Coefficient Apply Perspective
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Notes and References
- 1.M. A. Choudhury. Contributions to Islamic Economic Theory: A Study in Social Economics (London: Macmillan, 1986), Ch. 11.Google Scholar
- 2.M. M. Metwally, Macroeconomic Models of Islamic Doctrines (London: J. K. Publishers, 1981).Google Scholar
- 3.Y. P. Venieris and F. D. Sebold, Macro-Economic Models and Policy (New York: John Wiley, 1977).Google Scholar
- 4.M. A. Choudhury. An Islamic Social Welfare Function (Indianapolis, Ind.: American Trust Publications, 1983).Google Scholar
- 5.The statistical inference method used here is from D. V. Huntsberger and P. Billingsley, Elements of Statistical Inference (Boston: Allyn & Bacon, 1977).Google Scholar