The Effect of Fiscal Policy on Inflation Rate in Cambodia

Ratana Eng and Siphat Lim
Additional contact information
Ratana Eng: CamEd Business School
Siphat Lim: CamEd Business School, Cambodia

Journal of Accounting, Finance, Economics, and Social Sciences, 2022, vol. 7, issue 1, 31-40

Abstract: A reduced-form VAR model was employed to investigate the inter-relationship between three macroeconomic indicators, consumer price index, nominal exchange rate, and government expenditure. The estimated result of the forecast error variance decomposition indicated that the variation of inflation rates over the period of the study was mainly caused by the variation of itself about 96 percent in the short-run and reduced to around 81.31 percent in the long-run. This claimed that the price was sticky in Cambodia. In the short-run, the percentage change of exchange rate caused no more than 5 percent change of the variation of inflation rate, but the effect was predicted to be two and haft folds in the long run. The variation of inflation rate caused by the percentage change of government expenditure was no greater than 6 percent considered as low as compared to the percentage change of exchange rate. The estimated result of the impulse response function indicated that fiscal expansionary had a positive and negative effect on inflation rate in the short and long run, respectively.

Keywords: Inflation rate; Fiscal policy; VAR model; FEVD; IRF (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://jafess.com/index.php/home/article/view/45 Abstract page (text/html)
https://jafess.com/index.php/home/article/download/45/35 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:euj:jafess:v:7:y:2022:i:1:id:45

DOI: 10.62458/jafess.160224.7(1)31-40

Access Statistics for this article

More articles in Journal of Accounting, Finance, Economics, and Social Sciences from CamEd Business School
Bibliographic data for series maintained by Narin Choeun ().