Nexus Between Economic Growth and Inflation: Evidence from Bangladesh

Abstract

This paper analyzes the long run and short run relationship between economic growth and inflation in Bangladesh using annual data set during 1980 to 2016. The vector error correction model verified that there exists at least one co integrating relation among them. In the long run, the macroeconomic variables come back to the equilibrium through the error correction term of -0.4306. But in the short run, the model could not show any such features.

Keywords: Inflation, Growth, Cointegration, Vector Error Correction Model (VECM)

JEL Classification: C22, E31, O11

DOI: 10.7176/JESD/10-16-03

Publication date: August 31^st 2019