Abstract
This paper assesses the role of monetary policy on economic growth in selected developingcountries and empirically estimates a dynamic model for exploring the performance of monetarypolicy in developing countries. The panel data is collected for 44 developing countries from 1974to 2018. The analysis is carried out through the Generalized Method of Moment (GMM) which isefficient to handle the problem of endogeneity and serial correlation. The results of monetaryindicators show that expansionary monetary policy is best suited for economic growth indeveloping countries. The results of the money supply and banks reserve ratio suggested thatexpansionary monetary policy is more appropriate for selected countries over contractionarymonetary policy. In a similar line, population growth performs a negative impact on economicgrowth while the developing countries are labor-abundant, and analysis supports that the laborforce has a positive role in economic growth. Based on empirics, it is suggested that expansionary monetary policy is more effective for economic growth and economic stability in selectedcountries.
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