An Analysis of the Philippine Aggregate Demand, Money Supply, and Interest Rate: A Monetarist Perspective in Economic-Pandemic Scenario

The Philippine economy is one of the countries that were hard hit by the pandemic, sparing almost none in the global economic arena. Various economic theories argued and purported different measures to address such economic shocks of a country. Hence, this study aimed to understand the monetarist perspective of the liquidity market of the economy utilizing broad money and interest rates as variables understudy. The researchers used mixed research design in undertaking this study. A descriptive-causal design triangulated with systematic literature review was specifically utilized. The study found out that the Real Gross Domestic Product growth (RGDP) and broad money growth were slowed, and interest rate growth was almost constant. Initially, the regression model was stable on the second difference and has met the classical assumptions of regression modelling. Considerably, the multiple regression results showed that there is a significant relationship between interest rate growth and broad money growth to the RGDP growth. Moreover, the literature reviews points that under monetarist conditions, the money supply and interest rates growths were significantly influencing the growth of aggregate demand through various economic linkage and leakage. In addition, aggregate. economic growth as a general status quo in a pandemic scenario posed a great challenge to maximize monetary policy to efficiently help the economy spur growth. Hence, under the monetarist view, the researchers recommend the intensification of expanding broad money through expansionary monetary policy with constant monitoring of market interest fluctuations to further boost the aggregate demand and spur growth as a rebound growth strategy of the Philippine economy.

Keywords – Aggregate demand, interest rate, money supply, monetarist, pandemic scenario