IDEAS home Printed from https://ideas.repec.org/a/sae/mareco/v3y2009i1p1-20.html
   My bibliography  Save this article

Is There a Threshold Level of Inflation for Bangladesh?

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/097380100800300101
    Download Restriction: no
    File URL: https://libkey.io/10.1177/097380100800300101?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hayami, The late Yujiro & Godo, Yoshihisa, 2005. "Development Economics: From the Poverty to the Wealth of Nations," OUP Catalogue, Oxford University Press, edition 3, number 9780199272716.
    2. Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
    3. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    4. Levine, Ross & Zervos, Sara J, 1993. "What We Have Learned about Policy and Growth from Cross-Country Regressions?," American Economic Review, American Economic Association, vol. 83(2), pages 426-430, May.
    5. Subrata Ghatak & Chris Milner & Utku Utkulu, 1997. "Exports, export composition and growth : cointegration and causality evidence for Malaysia," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 213-223.
    6. Ruth Judson & Athanasios Orphanides, 1999. "Inflation, Volatility and Growth," International Finance, Wiley Blackwell, vol. 2(1), pages 117-138, April.
    7. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    8. Michael Bruno & William Easterly, 1996. "Inflation and growth: in search of a stable relationship," Review, Federal Reserve Bank of St. Louis, vol. 78(May), pages 139-146.
    9. Max Gillman & Anton Nakov, 2004. "Granger causality of the inflation–growth mirror in accession countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 653-681, December.
    10. Ram, Rati, 1985. "Exports and Economic Growth: Some Additional Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 415-425, January.
    11. De Gregorio, Jose, 1992. "Economic growth in Latin America," Journal of Development Economics, Elsevier, vol. 39(1), pages 59-84, July.
    12. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    13. Frederic S. Mishkin, 2000. "Inflation Targeting in Emerging-Market Countries," American Economic Review, American Economic Association, vol. 90(2), pages 105-109, May.
    14. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    15. Jung, Woo S & Marshall, Peyton J, 1986. "Inflation and Economic Growth: Some International Evidence on Structuralist and Distortionist Positions: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(2), pages 227-232, May.
    16. By Mohsin S. Khan & Abdelhak S. Senhadji, 2001. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-1.
    17. Anne O. Krueger, 1978. "Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences," NBER Books, National Bureau of Economic Research, Inc, number krue78-1, March.
    18. Stockman, Alan C., 1981. "Anticipated inflation and the capital stock in a cash in-advance economy," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 387-393.
    19. Ram, Rati, 1987. "Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 51-72, October.
    20. Judson, Ruth & Orphanides, Athanasios, 1999. "Inflation, Volatility and Growth," International Finance, Wiley Blackwell, vol. 2(1), pages 117-138, April.
    21. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    22. Jonathan Temple, 2000. "Inflation and Growth: Stories Short and Tall," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 395-426, September.
    23. Tony Makin, 1999. "Further Reasons for Maintaining Low Inflation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(1), pages 83-88, March.
    24. Kavoussi, Rostam M., 1984. "Export expansion and economic growth : Further empirical evidence," Journal of Development Economics, Elsevier, vol. 14(1), pages 241-250.
    25. Krueger, Anne O, 1980. "Trade Policy as an Input to Development," American Economic Review, American Economic Association, vol. 70(2), pages 288-292, May.
    26. Unknown, 1961. "The Role of Agriculture in Economic Development," International Journal of Agrarian Affairs, International Association of Agricultural Economists, vol. 3(2), pages 1-1, April.
    27. Singh, Kanhaiya & Kalirajan, Kaliappa, 2003. "The inflation-growth nexus in India: an empirical analysis," Journal of Policy Modeling, Elsevier, vol. 25(4), pages 377-396, June.
    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. 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.

    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. 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. Onafowora, Olugbenga A. & Owoye, Oluwole, 1998. "Can Trade Liberalization Stimulate Economic Growth in Africa?," World Development, Elsevier, vol. 26(3), pages 497-506, March.
    3. Turan Subasat, 2003. "Does the Dollar Index Really Measure Outward Orientation?," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 309-326.
    4. Love, Jim & Chandra, Ramesh, 2005. "Testing export-led growth in Bangladesh in a multivarate VAR framework," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1155-1168, January.
    5. van den Berg, Hendrik, 1997. "The relationship between international trade and economic growth in Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 1-21.
    6. Alper Aslan & Ebru Topcu, 2018. "The Relationship between Export and Growth: Panel Data Evidence from Turkish Sectors," Economies, MDPI, vol. 6(2), pages 1-15, April.
    7. Umoh, Okon J. & Onye, Kenneth U., 2013. "The Growth Implication of Trade Liberalization in West Africa," MPRA Paper 88371, University Library of Munich, Germany.
    8. Jim Love & Ramesh Chandra, 2004. "Testing Export‐Led Growth in India, Pakistan and Sri Lanka Using a Multivariate Framework," Manchester School, University of Manchester, vol. 72(4), pages 483-496, July.
    9. Sayef Bakari, 2017. "The Impact of Vegetables Exports on Economic Growth in Tunisia," Economic Research Guardian, Weissberg Publishing, vol. 7(2), pages 72-87, December.
    10. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    11. Fadzil, Atikah & Masih, Mansur, 2017. "Does export lead growth? evidence from Japan," MPRA Paper 109290, University Library of Munich, Germany.
    12. Joshua J. Lewer & Hendrik Van den Berg, 2003. "How Large Is International Trade’s Effect on Economic Growth?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 363-396, July.
    13. Saroj Kumar Mahonty, . "Economic Growth, Exports and Domestic Demand in India: In search of a New Pardigm of Development," Chapters, in: Zhang Yunling & Fukunari Kimura & Sothea Oum (ed.), Moving Toward A New Development Model For East Asia-The Role of Domestic Policy and Regional Cooperation, chapter 6, pages 191-222, Economic Research Institute for ASEAN and East Asia (ERIA).
    14. Vianna, Andre C. & Mollick, Andre V., 2021. "Threshold effects of terms of trade on Latin American growth," Economic Systems, Elsevier, vol. 45(4).
    15. AKBAR Mohammad & NAQVI Zareen Fatima, 2010. "Are Exports an Engine of Growth in Pakistan?," EcoMod2003 330700004, EcoMod.
    16. Asmawi Hashim & Norimah Rambeli & Norasibah Abdul Jalil & Normala Zulkifli & Emilda Hashim & Noor Al-Huda Abdul Karim, 2019. "Does Export Led Growth Hypothesis Hold Under World Crisis Recovery Regime in Malaysia?," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(5), pages 9-19, December.
    17. Pushpa Trivedi & Narayan Chandra Pradhan, 2010. "Exports and Growth Nexus in India: An Econometric Analysis," Millennial Asia, , vol. 1(1), pages 97-121, January.
    18. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    19. Khalafalla, Khalid Yousif & Webb, Alan J., 2000. "Exports And Economic Growth Under Structural Change: A Co-Integration Analysis Of Evidence From Malaysia," Working Papers 14595, International Agricultural Trade Research Consortium.
    20. Stefanescu, Razvan & Dumitriu, Ramona, 2014. "Investigation on the relationship between Romanian foreign trade and industrial production," MPRA Paper 62547, University Library of Munich, Germany.

    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:sae:mareco:v:3:y:2009:i:1:p:1-20. 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: SAGE Publications (email available below). General contact details of provider: http://www.ncaer.org/ .

    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.