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Exploring the Impact of Inflation on Economic Development in Bangladesh

Author

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  • Md. Sayebur Rahman

    (Department of Finance and Banking, Begum Rokeya University, Rangpur.)

Abstract

A moderate and stable inflation rate helps a country's development and hence economic growth. A modest degree of inflation supplements savers' returns, boosts investment, and thereby promotes a country's economic growth. This article empirically investigates the current link between inflation and economic development in Bangladesh, utilizing data on GDP growth and GDPD as a proxy for inflation from 1960 to 2018. The Granger Causality Test, unit root test, Co-integration, and VECM were used to evaluate empirical data. According to the empirical data, there is a statistically substantial long-run negative association between GDPD and GDP, demonstrating an adverse correlation between inflation and economic development. Again, data showed that there is long-run positive causation between GDP and GDPD. Furthermore, the threshold level of inflation has a beneficial outcome on economic growth, but inflation has a detrimental influence on economic growth if it reaches the threshold level. The key policy implications of the empirical findings are summarized in this study.

Suggested Citation

  • Md. Sayebur Rahman, 2023. "Exploring the Impact of Inflation on Economic Development in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 19(1), pages 87-96.
    • Handle: RePEc:aif:journl:v:19:y:2023:i:1:p:87-96
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    References listed on IDEAS

    as
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