Government spending drives inflation in Bangladesh, impacting economic progress.
The study looked at how exchange rates, money supply, interest rates, and government spending affect inflation in Bangladesh from 1976 to 2010. They found that in the long run, changes in exchange rates can lower inflation, while money supply and interest rates don't have a big impact. Government spending, however, tends to increase inflation. In the short term, inflation is influenced by interest rates and government spending. To reduce inflation, the government needs to use monetary and fiscal policies that match the real economic situation.