Effect of Monetary Policy on Poverty: An Analysis from Developing Countries

Abstract

In this research work, we have focused on the impact of monetary policy on poverty reduction in developing countries. We have used data from 1991 to 2024 from these developing countries. Poverty was used as the dependent variable. However, money supply, interest rate, inflation, and urban population were taken as independent variables. For the sake of analysis, we have used OLS regression analysis. The regression result showed that money supply tended to reduce poverty in developing economies. Though the real interest rate has increased the poverty level of the concerned nations. The study findings also showed inflation has increased the poverty level. Finally, the urban population has caused less poverty in developing countries. The study has concluded that monetary policy affects poverty in developing economies. The study has suggested a stable interest rate for the financial stability of the economies. The role of money supply should be positive in reducing poverty in the concerned developing countries. There is a dire need to control inflation in the developing countries. Finally, there should be more investment and usage of technology in industries in urban areas for reducing poverty and increasing growth.