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INFLATION AND THE ECONOMIC GROWTH: Evidence from Five Asian Countries

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  • Muhammad AZAM KHAN*
  • Saleem KHAN*

Abstract

The purpose of this study is to investigate the effects of inflation on rate of economic growth of the Five Asian countries; namely, Bangladesh, Iran, Indonesia, Malaysia and Pakistan, for the period 1973 to 2016. Using the appropriate tests, the property was checked and found not to exhibit the unit root, thus making the data to be stationary. Based on data of the study, the Least Squares and traditional panel estimation techniques were used. The Least Squares results revealed that inflation has negative and statistically significant impact on economic growth in all sampled countries. Similarly, the panel data techniques were also confirmed to be negative with significant relationship between the rates of inflation and economic growth. Thus, the main points emerging are that inflation is not helpful but harmful to the rate of economic growth. This study contributes a valuable addition to the existing literature about linkages of inflation rate and the economic growth. The findings suggest that an effective macroeconomic policymix needs to be devised to control inflation and encourage the process of economic growth and development; and thereby largely bolster the social well-being.

Suggested Citation

  • Muhammad AZAM KHAN* & Saleem KHAN*, 2018. "INFLATION AND THE ECONOMIC GROWTH: Evidence from Five Asian Countries," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 28(2), pages 235-252.
    • Handle: RePEc:pje:journl:article28winiv
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    Cited by:

    1. Ghanashyama Mahanty & Dwijendra Nath Dwivedi & Badri Narayanan Gopalakrishnan, 2023. "The Efficacy of Fiscal Vs Monetary Policies in the Asia-Pacific Region: The St. Louis Equation Revisited," Vision, , vol. 27(2), pages 256-263, April.
    2. Muhammad Azam & Saleem Khan, 2022. "Threshold effects in the relationship between inflation and economic growth: Further empirical evidence from the developed and developing world," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4224-4243, October.
    3. Young Ademola Obafemi, 2022. "Specialization Versus Diversification as Alternative Strategies for Sustainable Growth in Resource-Rich Developing Countries. Case of Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(3), pages 1-47, September.
    4. Ayfer Ozyilmaz, 2022. "Relationship Between Inflation and Economic Growth in EU Countries," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 425-438, July.

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