This study presents the relationship between money supply and real output in Egyptian Economy. For this purpose, co- integration and Granger causality tests are employed on money supply and real output data of Egypt which covers the period 80/1981-13/2014.
The statistical results indicate that the time series of variables are non-stationary in levels and first-difference stationary . the co- integration test suggest that the time series of variables are cointegrated in long run. Granger causality test show a positive significant causality running from real output to money supply. This result consistent with the Keynesian theory.