Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry

Amit Kundu

doi:doi:10.11648/j.jwer.20170603.11

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Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry

Amit Kundu

Published in Journal of World Economic Research (Volume 6, Issue 3)

Received: 1 September 2016 Accepted: 8 March 2017 Published: 17 May 2017

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Abstract

The study analyzed the impact of exchange rate, money supply, interest rate and government expenditure on inflation of Bangladesh by using time series data from 1976-2010 by employing Bound Testing approach. The analysis demonstrates that in the long-run, rate of change of exchange rate has negative effect on inflation. Money supply and interest rate have no significant effect on inflation, and government expenditure has a positive effect on inflation. While in the short-run, the results indicate directional causality taking inflation as dependent variable with other macro-economic variables like exchange rate, money supply, interest rate and government expenditure. It is manifest that inflation is sensitive to changes both interest rate and government expenditure in the short run. Therefore, the government should realise effective macro-economic policies that is effective for economical progress in the short run. The policy implication is that in Bangladesh to lessen inflation momentum the government will have to pursue a monetary and fiscal policy which matches with the actual scenario of real sectors and monetary sectors.

Published in	Journal of World Economic Research (Volume 6, Issue 3)
DOI	10.11648/j.jwer.20170603.11
Page(s)	27-33
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

ARDL, Bound Testing, Error Correcting Term, Exchange Rate, Govt. Expenditure Inflation, Interest Rate, Money Supply

References

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[2]	Adeyeye and Kola (2012) “Empirical Analysis of the causes and effects of Inflation in Nigeria” Journal of Economic and Sustainable Development, www.iiste.org, vol.3, no.11. Pp35-40.
[3]	Akibobola, T. O (2012)”The dynamics of money supply, exchange rate and inflation in Nigeria” Journal of Finance and banking, vol.2 no.4, pp117-141.
[4]	Asogu, J. O. (1991)”An econometric Analysis of the nature and causes of Inflation in Nigeria” Economic and Financial Review, Vol.29, no.2.
[5]	Aris, M. J. (1992) “Wage inflation” in current issues on Macroeconomics, London, Macmillan Education ltd.
[6]	Batini, N. (2004) Achieving and Maintaining Price Stability in Nigeria, IM working paper, 04-97, Washington DC.
[7]	Edwaikhide et al (1994) “Exchange rate, Money supply and Inflation in Nigeria: An Empirical Investigation” African Journal of Economic Policy, vol.2 Pp57-73.
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[21]	Oyejide, T. A. (1972) “Deficit Financing, Inflation and capital Formation: The analysiso the Nigerian economy, 1957-1970” NJESS, vol.14.
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Amit Kundu. (2017). Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. Journal of World Economic Research, 6(3), 27-33. https://doi.org/10.11648/j.jwer.20170603.11

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ACS Style

Amit Kundu. Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. J. World Econ. Res. 2017, 6(3), 27-33. doi: 10.11648/j.jwer.20170603.11

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AMA Style

Amit Kundu. Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. J World Econ Res. 2017;6(3):27-33. doi: 10.11648/j.jwer.20170603.11

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@article{10.11648/j.jwer.20170603.11,
  author = {Amit Kundu},
  title = {Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry},
  journal = {Journal of World Economic Research},
  volume = {6},
  number = {3},
  pages = {27-33},
  doi = {10.11648/j.jwer.20170603.11},
  url = {https://doi.org/10.11648/j.jwer.20170603.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20170603.11},
  abstract = {The study analyzed the impact of exchange rate, money supply, interest rate and government expenditure on inflation of Bangladesh by using time series data from 1976-2010 by employing Bound Testing approach. The analysis demonstrates that in the long-run, rate of change of exchange rate has negative effect on inflation. Money supply and interest rate have no significant effect on inflation, and government expenditure has a positive effect on inflation. While in the short-run, the results indicate directional causality taking inflation as dependent variable with other macro-economic variables like exchange rate, money supply, interest rate and government expenditure. It is manifest that inflation is sensitive to changes both interest rate and government expenditure in the short run. Therefore, the government should realise effective macro-economic policies that is effective for economical progress in the short run. The policy implication is that in Bangladesh to lessen inflation momentum the government will have to pursue a monetary and fiscal policy which matches with the actual scenario of real sectors and monetary sectors.},
 year = {2017}
}

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TY  - JOUR
T1  - Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry
AU  - Amit Kundu
Y1  - 2017/05/17
PY  - 2017
N1  - https://doi.org/10.11648/j.jwer.20170603.11
DO  - 10.11648/j.jwer.20170603.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 27
EP  - 33
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20170603.11
AB  - The study analyzed the impact of exchange rate, money supply, interest rate and government expenditure on inflation of Bangladesh by using time series data from 1976-2010 by employing Bound Testing approach. The analysis demonstrates that in the long-run, rate of change of exchange rate has negative effect on inflation. Money supply and interest rate have no significant effect on inflation, and government expenditure has a positive effect on inflation. While in the short-run, the results indicate directional causality taking inflation as dependent variable with other macro-economic variables like exchange rate, money supply, interest rate and government expenditure. It is manifest that inflation is sensitive to changes both interest rate and government expenditure in the short run. Therefore, the government should realise effective macro-economic policies that is effective for economical progress in the short run. The policy implication is that in Bangladesh to lessen inflation momentum the government will have to pursue a monetary and fiscal policy which matches with the actual scenario of real sectors and monetary sectors.
VL  - 6
IS  - 3
ER  -

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Author Information

Amit Kundu

Department of Economics, Mathabhanga College, Cooch Behar, India

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APA Style

Amit Kundu. (2017). Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. Journal of World Economic Research, 6(3), 27-33. https://doi.org/10.11648/j.jwer.20170603.11

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ACS Style

Amit Kundu. Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. J. World Econ. Res. 2017, 6(3), 27-33. doi: 10.11648/j.jwer.20170603.11

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AMA Style

Amit Kundu. Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry. J World Econ Res. 2017;6(3):27-33. doi: 10.11648/j.jwer.20170603.11

Copy | Download

@article{10.11648/j.jwer.20170603.11,
  author = {Amit Kundu},
  title = {Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry},
  journal = {Journal of World Economic Research},
  volume = {6},
  number = {3},
  pages = {27-33},
  doi = {10.11648/j.jwer.20170603.11},
  url = {https://doi.org/10.11648/j.jwer.20170603.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20170603.11},
  abstract = {The study analyzed the impact of exchange rate, money supply, interest rate and government expenditure on inflation of Bangladesh by using time series data from 1976-2010 by employing Bound Testing approach. The analysis demonstrates that in the long-run, rate of change of exchange rate has negative effect on inflation. Money supply and interest rate have no significant effect on inflation, and government expenditure has a positive effect on inflation. While in the short-run, the results indicate directional causality taking inflation as dependent variable with other macro-economic variables like exchange rate, money supply, interest rate and government expenditure. It is manifest that inflation is sensitive to changes both interest rate and government expenditure in the short run. Therefore, the government should realise effective macro-economic policies that is effective for economical progress in the short run. The policy implication is that in Bangladesh to lessen inflation momentum the government will have to pursue a monetary and fiscal policy which matches with the actual scenario of real sectors and monetary sectors.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Influence of Some Macroeconomic Variables on Inflation-An Econometric Enquiry
AU  - Amit Kundu
Y1  - 2017/05/17
PY  - 2017
N1  - https://doi.org/10.11648/j.jwer.20170603.11
DO  - 10.11648/j.jwer.20170603.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 27
EP  - 33
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20170603.11
AB  - The study analyzed the impact of exchange rate, money supply, interest rate and government expenditure on inflation of Bangladesh by using time series data from 1976-2010 by employing Bound Testing approach. The analysis demonstrates that in the long-run, rate of change of exchange rate has negative effect on inflation. Money supply and interest rate have no significant effect on inflation, and government expenditure has a positive effect on inflation. While in the short-run, the results indicate directional causality taking inflation as dependent variable with other macro-economic variables like exchange rate, money supply, interest rate and government expenditure. It is manifest that inflation is sensitive to changes both interest rate and government expenditure in the short run. Therefore, the government should realise effective macro-economic policies that is effective for economical progress in the short run. The policy implication is that in Bangladesh to lessen inflation momentum the government will have to pursue a monetary and fiscal policy which matches with the actual scenario of real sectors and monetary sectors.
VL  - 6
IS  - 3
ER  -

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