Abstract:
The study aims to examine the general equilibrium level achieved by Sudan economy. The model of IS-LM-BP is used to analyze the data for 1970-2010. The study has adopted the following hypotheses:
In spite of the equilibruim in Sudan economy. it is possible to achieve general equilibrium. The macroeconomic theory pertaining to the model of IS-LM-BP is applicable for the Sudan economy. The model of IS-LM-BP can be used to determine the cost Lending rate. The economic policies pursued in Sudan are capable to achieve the equilibrium in case of imbalance. The investment decision will be made on the basis of cost Lending rate. and The cost of Lending rate can be used as an instrument to control the quantity of money circulaled.
The Descriptive, Comparative, Analytical & Econometric methodology has been used to construct the research model, Eviews program and SPSS for analysis. The data is collected from the Bank of Sudan and Bureau of Central Statistics. The tests of Dickey Fuller and Philips Beron are applied to determine the static variables level and also Johnson Test is used to identify variables Co-integration. It is found that variables at the first level are static according to ADF Test and integrated in the long run as per Johnson Test. The findings are as follows:
It was Impossible for the Sudan economy to achieve the general equilibrium Except for the year 2010. IS-LM-BP model is not applicable for the Sudan economy. the Possibility of equilibrium for the year 2010 with a growth rate of government spending by 11% and reduce the quantity of money circulation by 2% and reduce the balance of payments deficit by 10%. The model of IS-LM-BP can’t help to determining the cost of Lending rate. The cost of Lending rate a Macroeconomic indicator is influential on the decision to invest in Sudan. the cost of Lending rate as an indicator is not considered an effective tool to influence the quantity of money circulation.
The recommendations are as follows:
Use Package political simultaneous indicators of the economy represented by the increased government spending and reduce the money circulation and the balance of payments deficit in order to approach the general equilibrium. Work on reducing inflation rates through appropriate economic policies in order to activate the effect of Total Investment Lending cost rate index. and achieve macroeconomic economic development.
