Economics, Econometrics and Finance
4 years ago

Budget deficits in Bangladesh drive inflation, money supply ineffective.

SSRN Electronic Journal
Causality Analysis between Inflation, Budget Deficit and Money Supply: Empirical Evidence from Bangladesh
Muntasir Murshed, Sakib Bin Amin, Meem Hasin Chadni

Paper Summary

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The study looked at how inflation, budget deficits, and money supply are connected in Bangladesh from 1980 to 2014. They found that when the government spends more than it earns (budget deficit), it can lead to inflation in the short term. However, there was no direct link between money supply and inflation in both the short and long term.