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Is The Association Between Fdi And Inflation Symmetric Or Asymmetric? Evidence From Ardl And Nardl Techniques

Author

Listed:
  • SADDAM HOSSAIN

    (INCEIF University, Jalan Tun Ismail, 50480 Kuala Lumpur, Malaysia)

  • MOSHARROF HOSEN

    (��Department of Accounting and Finance, UCSI University, Kuala Lumpur, Malaysia)

  • HASSANUDIN MOHD THAS THAKER

    (��Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

  • GAGAN DEEP SHARMA

    (�University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16 C, Dwarka, New Delhi, India)

  • MANSUR MASIH

    (�Universiti Kuala Lumpur, 50250 Kuala Lumpur, Malaysia)

  • CHUEN-KHEE PEK

    (��Taylor’s Business School, Faculty of Business and Law, Taylor’s University, Malaysia)

Abstract

Based on the demand-pull and cost-push theory, this study examines the relationship between foreign direct investment (FDI) and inflation nexus by using time series technique of Autoregressive Distributed Lags (ARDL). Asymmetry assumption was investigated by employing relatively advanced Nonlinear Autoregressive Distributed Lag (NARDL) method. Annual data from 1973 to 2017 has been collected from the World Bank database and DataStream. The results revealed that Bangladesh’s FDI inflow has a significant impact on the inflation rate, which augurs well for the economy. In addition, we also discover an asymmetric relationship in the long run and symmetric relationship in the short run. Several policy recommendations of these findings are provided.

Suggested Citation

  • Saddam Hossain & Mosharrof Hosen & Hassanudin Mohd Thas Thaker & Gagan Deep Sharma & Mansur Masih & Chuen-Khee Pek, 2024. "Is The Association Between Fdi And Inflation Symmetric Or Asymmetric? Evidence From Ardl And Nardl Techniques," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(08), pages 2659-2685, December.
    • Handle: RePEc:wsi:serxxx:v:69:y:2024:i:08:n:s0217590823500455
    DOI: 10.1142/S0217590823500455
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    Keywords

    Foreign direct investment (FDI); inflation; ARDL; NARDL; symmetry–asymmetry relationship; Bangladesh;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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