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Inflation Led Import or Import Led Inflation: Evidence from Bangladesh

Author

Listed:
  • Muktadir-Al-Mukit, Dewan

    (Eastern University)

  • Shafiullah, A. Z. M.

    (Dhaka University)

  • Ahmed, Md. Rizvy

    (Eastern University)

Abstract

This study investigates the relationship between inflation and import for the economy of Bangladesh over the sample period of 2000 to 2011. This study used different econometric techniques of measuring the long and short term relationship between variables. The Johansen Cointegration test is used to determine the existence of a long term relationships between study variables. The normalized Cointegrating coefficients are found statistically significant and show a stable and positive relationship between study variables. The short run interactions are similar to the long run relationships. The estimated error correction coefficient indicates that 0.6 percent deviation of the inflation rate from its long run equilibrium level is corrected each period where such correction rate for import is 24 percent. Finally, Granger causality analysis suggests the existence of a unidirectional causality running from Inflation to import.

Suggested Citation

  • Muktadir-Al-Mukit, Dewan & Shafiullah, A. Z. M. & Ahmed, Md. Rizvy, 2013. "Inflation Led Import or Import Led Inflation: Evidence from Bangladesh," Asian Business Review, Asian Business Consortium, vol. 2(2), pages 65-69.
    • Handle: RePEc:ris:asbure:0124
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    Citations

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    Cited by:

    1. Sameer Mostafa Abumdallala, 2019. "The Relationship Between Imports and Inflation in Palestine: Toda and Yamamoto Causality Analysis," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 10(2), pages 17-21, March.
    2. Syed Jaffar Abbas & Noman Arshed, 2023. "Examining Determinants of Regional Inflation Heterogeneity — A Robust Panel Data Analysis," SAGE Open, , vol. 13(4), pages 21582440231, December.

    More about this item

    Keywords

    Inflation; Import; Cointegration; VECM; Granger Causality;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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