A Causal Relation between Inflation and GDP in Bangladesh A Time Series Analysis

Abstract

One of the major goals of developing countries like Bangladesh is to accomplish speedy economic growth. It's debatable whether inflation and economic growth are related. Examining the link between inflation and economic growth in Bangladesh is the main goal of this study. Unit root test was conducted using the Augmented Dickey Fuller and Phillips-Perron (PP) test. Using information from Word Development Indicators, this study investigates the Granger causality test between economic growth and inflation in Bangladesh from 1990 to 2021. The Granger causality (GC) test shows no bilateral relation between this two. The regression test shows that inflation based on Consumer price index (CPI) influences the GDP per capita significantly, though there is no significant impact of inflation based on GDP deflator on GDP. The recognition of the study can be efficient for monetary policymakers in Bangladesh to maintain moderate inflation, which is consistent with the economy of Bangladesh.