How the banking system is creating a two-way inflation in an economy

Ahmed Mehedi Nizam

MPRA Paper from University Library of Munich, Germany

Abstract: Here we argue that due to the difference between real GDP growth rate and nominal deposit rate, a demand pull inflation is induced into the economy. On the other hand, due to the difference between real GDP growth rate and nominal lending rate, a cost push inflation is created. We compare the performance of our proposed model to the Fisherian one by using Toda and Yamamoto approach of testing Granger Causality in the context of non-stationary data. We then use ARDL Bounds Testing approach to cross-check the results obtained from T-Y approach.

Keywords: banking; interest rate; deposit rate; lending rate; demand pull inflation; cost push inflation (search for similar items in EconPapers)
JEL-codes: E31 E43 E44 E52 E58 (search for similar items in EconPapers)
Date: 2020-04-02
New Economics Papers: this item is included in nep-mac and nep-mon
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Related works:
Journal Article: How the banking system is creating a two-way inflation in an economy (2020)
Working Paper: How the banking system is creating a two-way inflation in an economy? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99427

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