Inflation Dynamics of Bangladesh: An Empirical Analysis
##plugins.themes.bootstrap3.article.main##
This study investigated the factors which contributed to inflation in Bangladesh from 1986 to 2021. The study also explored the presence of a long-run relationship among inflation (denoted by Consumer Price Index), GDP, broad money supply, and exchange rate. Johansen cointegration test confirmed no long-run relationship among those selected variables in Bangladesh. I also employed Vector Auto Regression (VAR) method to reveal the causal relationship among them. The estimated result confirms that one period lagged of inflation and money supply positively affect inflation, which is significant. While the current period’s inflation is negatively affected by the last period’s GDP and exchange rate, these effects are not statistically significant. Additionally, last year’s inflation, GDP, and money supply have a positive effect on the current period’s GDP.
Downloads
Download data is not yet available.
References
-
Ahmed, S., & Mortaza, M. G. (2010). Inflation and economic growth in Bangladesh: 1981-2005 (No. id: 3033).
Google Scholar
1
-
Bangladesh Bank (2023), www.bb.org.bd.
Google Scholar
2
-
Bangladesh Bureau of Statistics (2020) retrieved from http://bbs.gov.bd/.
Google Scholar
3
-
Dhakal, D., Kandil, M., Sharma, S. C., & Trescott, P. B. (1994). Determinants of the Inflation rate in the United States: A VAR Investigation. The Quarterly Review of Economics and Finance, 34(1), 95-112.
Google Scholar
4
-
Dickey, DA and WA Fuller (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: Journal of the Econometric Society, 49, 1057–1072.
Google Scholar
5
-
Durevall, D., Loening, J. L., & Birru, Y. A. (2013). Inflation dynamics and food prices in Ethiopia. Journal of development economics, 104, 89-106.
Google Scholar
6
-
Engle, Robert F.; Granger, Clive W. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing, Econometrica: Journal of the Econometric Society, 251-276.
Google Scholar
7
-
F. Bashir, S. Nawaz, K. Yasin, U. Khursheed, J. Khan, M. J.
Google Scholar
8
-
Qureshi, “Determinants of inflation in Pakistan: An econometric analysis using Johansen co-integration approach,” Australian Journal of Business and Management Research, vol. 1(5), p. 71, 2011.
Google Scholar
9
-
Ghosh, A., & Phillips, S. (1998). Warning: Inflation may be harmful to your growth. Staff Papers, 45(4), 672-710.
Google Scholar
10
-
Hashim, M. J., Osman, I., & Elias, N. L. (2014, August). The determinants of inflation in Malaysia. In 3rd International Conference on Accounting, Business and Economics (ICABEC2014).
Google Scholar
11
-
Jiban, A. J., Biswas, G. K., & Yang, S. (2022). Ready-Made Garments (RMG) Export Earnings and Economic Development of Bangladesh: Empirical Analysis Using Vector Error Correction Model. The Journal of Asian Finance, Economics and Business (JAFEB), 9(10), 29-38.
Google Scholar
12
-
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of economic dynamics and control, 12(2-3), 231-254.
Google Scholar
13
-
Majumder, S. C., & Ferdaus, J. (2020). Contribution of ready-made garments industry on the economic development of Bangladesh: an empirical analysis. The Economics and Finance Letters, 7(2), 295-307.
Google Scholar
14
-
Mankiw, N. Gregory (2012). Macroeconomics, Eigth Edition, New York: Worth Publishers, Inc.
Google Scholar
15
-
Mohanty, D., & John, J. (2015). Determinants of inflation in India. Journal of Asian Economics, 36, 86-96.
Google Scholar
16
-
Phillips, PC and P Perron (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346.
Google Scholar
17
-
Sultana, N., Koli, R., & Firoj, M. (2019). Causal relationship of money supply and inflation: A study of Bangladesh. Asian Economic and Financial Review, 9(1), 42-51.
Google Scholar
18
-
Uddin, S., Chowdhury, N. M., & Hossain, M. A. (2014). Determinants of inflation in Bangladesh: An econometric investigation. Journal of World Economic Research, 3(6), 83-94.
Google Scholar
19
-
World Development Indicators, 2022, The World Bank. https://databank.worldbank.org/source/world-development-indicators.
Google Scholar
20
Most read articles by the same author(s)
-
Gautam Kumar Biswas,
Financial Inclusion and Its Impact on Economic Growth: An Empirical Evidence from South Asian Countries , European Journal of Business and Management Research: Vol. 8 No. 4 (2023)