This study is concerned in the long relation between monetary policy variable and
Damascus stock exchange (DSE) index,
In general, monetary policy transmission can affect the markets, so the stock market
also effected by that, and this study is in
terested in this relation, so it start by made
theoretical introduction about how can monetary variables effect the stock market index,
then it follow the statistical methodology by use Autoregressive-Distributed Lag model
(ARDL) to estimate the relation between independents variables which are money supply
M1,M2,exchange rate EX, interest rate I, inflation INF, and dependent variables which is
DSE index (M_I)
The result, by using the Unrestricted error correction model (UECM) shows that
there is positive relation in short and long term between money supply (M1) and DSE
index, but it was and negative one in short term between M2 and DSE index, and became a
positive in long term, and the relation was negative between inflation and DSE index in
short and long term. There was a negative one with exchange rate in short and long term,
and also negative one with interest rate.
As conclusion, it should be necessary to improve the behavior of monetary policy to
control all this variable in the way that made it has positive effects on DSE index.
