Determinants of Inflation in Bangladesh: An Econometric Approach

Dewan Muktadir-Al-Mukit
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Dewan Muktadir-Al-Mukit: Faculty of Business Administration, Eastern University, Bangladesh

International Journal of Business and Economics, 2018, vol. 17, issue 3, 277-293

Abstract: This study investigates the determinants of inflation from the perspective of an Asian emerging economy, Bangladesh, between 1977 and 2014. We explore both demand-side and supply-side factors causing inflation in Bangladesh, using econometric techniques for measuring the long-term and short-term relationship between variables under the concept of the Co-integration and Error Correction Model. Investigating causal relationships using the Granger causality test, the results reveal the existence of a stable long-run significant relationship of inflation with real GDP, money supply, imports, interest rate, remittances, and exchange rate. The findings herein suggest that the causes of inflation in Bangladesh are multi-dimensional and dynamic, and therefore the government should adopt proper strategies to curb inflation in the country.

Keywords: inflation; Co-integration; Granger causality; Bangladesh (search for similar items in EconPapers)
JEL-codes: C10 E31 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ijb:journl:v:17:y:2018:i:3:p:277-293

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