IDEAS home Printed from https://ideas.repec.org/a/eut/journl/v19y2015i3p265.html
   My bibliography  Save this article

Causal Nexus between Inflation and Economic Growth of Japan

Author

Listed:
  • Shailender Singh

    (Department of International Finance, I-Shou University, Taiwan.)

  • Amar Singh

    (Department of Commerce, GraphicEra Hill University, Uttarakhand, India.)

Abstract

This study aims to evaluate the link between economic growth and consumer price index (CPI) in Japan for the period of 1980-2014. Initial series were adjusted for stationarity using the Augmented Dickey- Fuller (ADF) test for unit root followed by the application of Johansen Co-integration Test in order to examine the long-run relationship among the variables, while the causalities were evaluated using Granger Causality model. The empirical results reveal that economic growth and CPI are co-integrated and thus exhibit a long-run relationship between the variables. The Granger causality test supports bi-directional causality between economic growth and CPI in Japan. The paper adopts a time series framework of the Vector Error Correlation Models (VECM) to study the dynamic relationship between economic growth and consumer price index for Japan.

Suggested Citation

  • Shailender Singh & Amar Singh, 2015. "Causal Nexus between Inflation and Economic Growth of Japan," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 19(3), pages 265-278, Autumn.
    • Handle: RePEc:eut:journl:v:19:y:2015:i:3:p:265
    as

    Download full text from publisher

    File URL: ftp://80.66.179.253/eut/journl/20153-2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    5. Saaed, A.A.J., 2007. "Inflation and Economic Growth in Kuwait: 1985-2005. Evidence from Co-Integration and Error Correction Model," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    6. Satya Paul & Colm Kearney & Kabir Chowdhury, 1997. "Inflation and economic growth: a multi-country empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1387-1401.
    7. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    8. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    9. Metin Berber & Seyfettin Artan, 2004. "Enflasyon ve Ekonomik Büyüme Ýliþkisi: Türkiye Örneði," Working Papers 2004/21, Turkish Economic Association.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lengnoo, Hayatee & Masih, Mansur, 2018. "Granger-causality between real exchange rate and economic growth: evidence from Thailand," MPRA Paper 111692, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Azmat Hayat & Huma Ghulam & Maryam Batool & Muhammad Zahid Naeem & Abdullah Ejaz & Cristi Spulbar & Ramona Birau, 2021. "Investigating the Causal Linkages among Inflation, Interest Rate, and Economic Growth in Pakistan under the Influence of COVID-19 Pandemic: A Wavelet Transformation Approach," JRFM, MDPI, vol. 14(6), pages 1-22, June.
    2. Said Zamin Shah & Said Zamin Shah & Ahmad Zubaidi Baharumshah & Muzafar Shah Habibullah & Law Siong Hook, 2017. "The Asymmetric Effects of Real and Nominal Uncertainty on Inflation and Output Growth: Empirical Evidence from Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 377-386.
    3. Lee, Chin, 2013. "The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth," MPRA Paper 44808, University Library of Munich, Germany.
    4. Saaed, A.A.J., 2007. "Inflation and Economic Growth in Kuwait: 1985-2005. Evidence from Co-Integration and Error Correction Model," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    5. Mothuti Gosego & Phiri Andrew, 2018. "Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?," Global Economy Journal, De Gruyter, vol. 18(4), pages 1-11, December.
    6. Abu N. M. Wahid & Muhammad Shahbaz & Pervaz Azim, 2011. "Inflation and Financial Sector Correlation: The Case of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 145-152.
    7. Nicholas Apergis & Stephen M. Miller, 2007. "Total Factor Productivity and Monetary Policy: Evidence from Conditional Volatility," International Finance, Wiley Blackwell, vol. 10(2), pages 131-152, July.
    8. Hrushikesh Mallick, 2008. "Inflation and growth dynamics: the Indian experience," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(3), pages 163-172.
    9. M., Azali & Wong, K. S. Kelly & Lee, C. & Shafinaz, Ahmad Nazar, 2007. "The Asean-5 Future Currency: Maastricht Criteria," MPRA Paper 10272, University Library of Munich, Germany.
    10. Luma Al-Qudah & Barbara Piontek & Judit Olah, 2021. "Economic Growth and Foreign Direct Investment in the Context of Financial Development: Evidence from Jordan," European Research Studies Journal, European Research Studies Journal, vol. 0(2B), pages 762-782.
    11. Tariq Hussain & Ahmad Raza Ul Mustafa & Makhdum M.I. & Kaleem Ullah, 2022. "Defense Expenditures, Fiscal Deficit And Debt Servicing Nexus: A Case Study Of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(2), pages 74-83, June.
    12. Hrushikesh Mallick, 2008. "Inflation and growth dynamics: the Indian experience," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 11(3), pages 163-172.
    13. 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.
    14. Bernard Njindan Iyke & Sin-Yu Ho, 2019. "Inflation, Inflation Uncertainty, and Growth: Evidence from Ghana," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(2), June.
    15. Athanasios Koulakiotis & Katerina Lyroudi & Nicholas Papasyriopoulos, 2012. "Inflation, GDP and Causality for European Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(1), pages 53-62, February.
    16. Muhammad Rashid Javed & Azka Amin & Parvez Azim, 2015. "Comparison of Standard of Living between Pakistan and Bangladesh," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 5(12), pages 715-724, December.
    17. Samir Abdelhafidh, 2020. "Does the external debt composition matter for economic growth in Tunisia?," Economics Bulletin, AccessEcon, vol. 40(4), pages 2802-2818.
    18. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    19. Shahbaz, Muhammad & Loganathan, Nanthakumar & Mujahid, Nooreen & Ali, Amjad & Nawaz, Ahmed, 2015. "Determinants of Life Expectancy and its Prospects under the Role of Economic Misery: A Case of Pakistan," MPRA Paper 67167, University Library of Munich, Germany, revised 10 Oct 2015.
    20. Asaduzzaman, Md, 2021. "Relationship between threshold level of inflation and economic growth in Bangladesh- a multivariate quadratic regression analysis," MPRA Paper 110333, University Library of Munich, Germany, revised 02 Feb 2021.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eut:journl:v:19:y:2015:i:3:p:265. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: [z.rahimalipour] (email available below). General contact details of provider: https://edirc.repec.org/data/fecutir.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.