IS THE ASSOCIATION BETWEEN FDI AND INFLATION SYMMETRIC OR ASYMMETRIC? EVIDENCE FROM ARDL AND NARDL TECHNIQUES

Saddam Hossain, Mosharrof Hosen, Hassanudin Mohd Thas Thaker, Gagan Deep Sharma, Mansur Masih and Chuen-Khee Pek
Additional contact information
Saddam Hossain: INCEIF University, Jalan Tun Ismail, 50480 Kuala Lumpur, Malaysia
Mosharrof Hosen: ��Department of Accounting and Finance, UCSI University, Kuala Lumpur, Malaysia
Hassanudin Mohd Thas Thaker: ��Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Kuala Lumpur, Malaysia
Gagan Deep Sharma: �University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16 C, Dwarka, New Delhi, India
Mansur Masih: �Universiti Kuala Lumpur, 50250 Kuala Lumpur, Malaysia
Chuen-Khee Pek: ��Taylor’s Business School, Faculty of Business and Law, Taylor’s University, Malaysia

The Singapore Economic Review (SER), 2024, vol. 69, issue 08, 2659-2685

Abstract: Based on the demand-pull and cost-push theory, this study examines the relationship between foreign direct investment (FDI) and inflation nexus by using time series technique of Autoregressive Distributed Lags (ARDL). Asymmetry assumption was investigated by employing relatively advanced Nonlinear Autoregressive Distributed Lag (NARDL) method. Annual data from 1973 to 2017 has been collected from the World Bank database and DataStream. The results revealed that Bangladesh’s FDI inflow has a significant impact on the inflation rate, which augurs well for the economy. In addition, we also discover an asymmetric relationship in the long run and symmetric relationship in the short run. Several policy recommendations of these findings are provided.

Keywords: Foreign direct investment (FDI); inflation; ARDL; NARDL; symmetry–asymmetry relationship; Bangladesh (search for similar items in EconPapers)
JEL-codes: C22 E58 F21 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590823500455

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