LINKING MONEY SUPPLY WITH THE GROSS
                      DOMESTIC PRODUCT IN ROMANIA

                             Daniela Zapodeanu, University of Oradea
                             Mihail Ioan Cociuba, University of Oradea


ABSTRACT: Evolution of money supply and gross domestic product are in a close relationship, in
this paper we analysis this relationship in order to construct a function which will explicit this
connection for Romania. Evolution of gross domestic product is one with a seasonal component so
from the data series we will be eliminating seasonality with the X-12 ARIMA method. Analyzing the
data of money supply (M3) and of GDP over ten years through the Augmented Dickey-Fuller we
obtained that both series are non-stationary. Applying the co-integration analysis method Engle-
Granger we conclude that the two series have a cointegration relationship between them. We will
propose a model explanation of the link between the two sets of data type, a DVAR model.

Key words: money supply (M3), GDP, seasonality, stationarity, cointegration, DVAR.

JEL codes:G17, C51.