Monetary Economics and Macroeconomic Model for an Islamic Economy

  • M. Fahim Khan


This chapter discusses macroeconomic model that reflects economic features of an Islamic economy, implied in the Islamic system of property rights (elaborated in the literature on Fiqh al-Mal) and in the Islamic system of exchange (elaborated in the literature on Fiqh al-Buyu’). In the theoretical framework of a macroeconomic model, the theory of monetary economics and theory of monetary policy for an Islamic economy refer to the economy that is operating strictly under the Islamic system of property rights and Islamic rules of exchange in the market and beyond market. This chapter also discusses monetary economics and monetary policy for a contemporary Muslim economy that is only a Muslim economy operating on conventional economic principles but intends to convert its financial and monetary system to conform to Islamic principles of money and finance. This chapter gives a brief overview of the current practice of monetary economics in the Muslim economies that have partially introduced Islamic banking and finance and are in the process of adjusting their monetary policy framework to conform to Islamic principles.


Monetary economics Monetary policy Interest-free economy Macroeconomic model 

JEL Classification

G20 G21 G28 


  1. Khan, M. F. (2013). Theorizing Islamic economics: Search for a framework for Islamic economic analysis. JKAU: Islamic Economics, 26(1), 209–242.Google Scholar
  2. Khan, M. F. (2015). Islamic social finance: Inclusive financial development and elimination of extreme poverty through Awqaf, Proceedings of International Conference on Islamic Banking and Finance, organized by Ummul Qura University, Makkah, Feb 2015.Google Scholar
  3. Khan, M. F. (2017). Economics and philanthropy in Islamic economic framework. Journal of Philanthropy, 1(1), 1–15.CrossRefGoogle Scholar
  4. Mankiw, N. G. (2014). Principles of economics (7th ed.). Stamford: South-Western College Publishing.Google Scholar
  5. World Economic Forum. (2015). Top 9 Countries for Islamic Finance. Geneva: World Economic Forum.Google Scholar
  6. Zarqa, M. A. (2017). Allocation of investment in an Islamic zero-interest economy. JKAU: Islamic Economics, 30(1), 63–72.Google Scholar

Copyright information

© Islamic Research and Training Institute 2019

Authors and Affiliations

  • M. Fahim Khan
    • 1
  1. 1.Islamic Centre for Research in Islamic EconomicsMinhaj UniversityLahorePakistan

Personalised recommendations