Deficit Financing and Inflation in Bangladesh: A Vector Autoregressive Analysis
AbstractThis paper analyses the dynamics of inflation in Bangladesh using vector autoregressive methods over the period from July 1999 to August 2008. Demand side factors are assessed in comparison with cost-push influences with a particular focus on the role of government borrowing from the domestic banking system. Over the sample period, previous values of inflation are the most significant source of inflation in the short-term, followed by net credit to the government. The results suggest that the management of expectations and the mode of budget financing are the most important focus areas for future price stability efforts.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 45981.
Date of creation: 2010
Date of revision:
Inflation; Bangladesh; deficit financing; vector autoregressive model;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
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