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Is There a Threshold Level of Inflation for Bangladesh?

Author

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  • Zia Uddin Chowdhury Hayat

    (FASID-GRIPS Joint Graduate Programme, National Graduate Institute for Policy Studies, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan. Tel: +81-3-5413-6037. Fax: +81-3-5413-0016, zia_hayat@yahoo.com)

  • Kaliappa P. Kalirajan

    (FASID-GRIPS Joint Graduate Programme, National Graduate Institute for Policy Studies, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan. Tel: +81-3-5413-6037. Fax: +81-3-5413-0016, Kalirajan@grips.ac.jp)

Abstract

Given the argument that an excessively low inflation threshold in developed countries may hurt economic growth, the objective of this study is to examine whether a developing country's perspective is different. The empirical analysis is done using the annual data from Bangladesh for the period 1976 to 2005. A specific question that is addressed in this paper is what the threshold inflation rate is for Bangladesh. The findings clearly suggest that the increase in inflation from any level has negative effects on economic growth, and substantial gains can be obtained by focusing monetary policy towards maintaining price stability.

Suggested Citation

  • Zia Uddin Chowdhury Hayat & Kaliappa P. Kalirajan, 2009. "Is There a Threshold Level of Inflation for Bangladesh?," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 3(1), pages 1-20, February.
    • Handle: RePEc:sae:mareco:v:3:y:2009:i:1:p:1-20
    DOI: 10.1177/097380100800300101
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    References listed on IDEAS

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    Cited by:

    1. Nawalage S. Cooray, 2013. "An Empirical Analysis of Inflation-Growth Nexus in Developing Countries: The Case of Sri Lanka," Working Papers EMS_2013_21, Research Institute, International University of Japan.
    2. Mohammad Mahabub Alam, 2018. "The Determinants of CPI Inflation in Bangladesh, 1980-2016," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(4), pages 441-461, December.
    3. Hayat, Zafar & Balli, Faruk & Rehman, Muhammad, 2018. "Does inflation bias stabilize real growth? Evidence from Pakistan," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1083-1103.

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