Driving the pulse of the economy or the dilution effect: Inflation impacting economic growth

Atigala, Piumi; Maduwanthi, Tharaka; Gunathilake, Vishmi; Sathsarani, Sanduni; Jayathilaka, Ruwan

doi:10.1371/journal.pone.0273379

Cited by 13 publications

(9 citation statements)

References 48 publications

(46 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The results of this research are consistent with the study conducted by Atigala (2022), which concluded that inflation has negative and significant effect on economic growth in the short term. Futhermore, Quddus (2022) study concluded that inflation in tha short term and long term has a negative and significant effet on economic growth.…”

Section: The Effect Of the Inflation On Economic Growth In Indonesiasupporting

confidence: 91%

The Effect of Inflation, Labor Force Participation Rate and Exports on Economic Growth in Indonesia

Nadilla,

Ichsan

2023

JMPE

View full text Add to dashboard Cite

This study examines the effect of inflation, labor force participation rate and exports on economic growth in Indonesia. This study analyzes the data using the Autoregressive Distributed Lag (ARDL) model with time-series data from 1990 to 2021 obtained from the World Bank and the Central Statistics Agency of Indonesia. The results conclude that in the short and long terminflation has a negative and significanteffect on economic growth in Indonesia. In the short term, labor force participation rate hasa positive and significant effect on economic growth in Indonesia. In the long term, labor force participationrate has a positive but insignificant effect on economic growth in Indonesia. In the shortand longterm, exports have a positive and significant effect on economic growth in Indonesia. Based on the research results, it is suggested that inflation control, improvement in the quality of the labor force, and export enhancement are necessary.

show abstract

Section: The Effect Of the Inflation On Economic Growth In Indonesiasupporting

confidence: 91%

The Effect of Inflation, Labor Force Participation Rate and Exports on Economic Growth in Indonesia

Nadilla,

Ichsan

2023

JMPE

View full text Add to dashboard Cite

show abstract

“…The same econometric instrument did not reveal a statistically significant relationship between the variables in the short run but confirmed this relationship in the long run. In turn, the case of Sri Lanka confirmed the negative impact of the inflation increase both in short-and long-run perspectives: a 1% increase in inflation stagnated economic growth by 3,427.94 mln USD in the short run and 107,263.8 mln USD in the long run (Atigala et al, 2022). These controversial modeling results might be explained not only by temporal patterns but also by geographical patterns and specific features of macroeconomic situation.…”

Section: Literature Reviewmentioning

confidence: 88%

Effectiveness of anti-inflation policy that ensures economic growth: Evidence from post-Soviet countries

Kerimov

Babayev

Ashurbayli-Huseynova

et al. 2023

Problems and Perspectives in Management

View full text Add to dashboard Cite

There are active debates on the scale of inflation-economic growth causality in the short- and long-term perspectives and factors affecting the correlation and effectiveness of anti-inflationary measures depending on initial economic conditions. These scientific debates result in controversial results. This study aims to explore short- and long-run relationships in the inflation-economic growth chain of 12 post-Soviet countries (Azerbaijan, Estonia, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Belarus, Moldova, Ukraine, and Georgia) to determine the most effective system of anti-inflationary policy. The paper employed statistical analysis and trend line extrapolation (analysis of inflationary trends in 2000–2021 and forecast for 2022–2024), pooled mean group of the autoregressive distributed lag model in the Stata 14.2/SE software (identification of the short and long-run coefficients characterizing relationships between inflation and economic growth), and ordinary least squares regression (country-specific modeling results). Statistical analysis showed that Latvia, Lithuania, and Estonia have the most effective anti-inflationary policy; Azerbaijan, Kazakhstan, Kyrgyzstan, and Moldova demonstrate moderate effectiveness, and the other countries have low effectiveness. It is also established that in the long run, a 1% increase in inflation results in a 0.195% decrease in GDP growth with a 99% confidence probability, while in the short run, this causal relationship is insignificant. Country-specific modeling results revealed that within 12 post-Soviet countries, economic growth in Kazakhstan, Lithuania, and Ukraine in a short-term perspective depends on inflation dynamics. According to the modeling results, Lithuania has the most effective anti-inflationary policy to ensure sustainable economic growth.

show abstract

“…FDI and economic growth relationship cannot be generalized mainly because it is highly subject to alteration with changing institutional, policy, and regulatory environment (Herzer et al 2008). The relationship between inflation and economic growth in developing countries is a subject on which there are still very wide differences of opinions (Wai 1959) The economists believe that appropriate rate of inflation is essential for economic growth, whereas the monetarists see inflation is detrimental to economic progress (Salian, n.d.) (Atigala et al 2022).…”

Section: A Theoretical Evidencementioning

confidence: 99%

Did the Economic Reforms Change the Macroeconomic Drivers of the Indian Economy in the Post-Reform Era? An ARDL Bounds Test Approach

REDDY,

BAGRECHA,

KRISHNAN

2023

Theor. Pract. Res. Econom. Fields

View full text Add to dashboard Cite

Purpose: The purpose of this study is to investigate the macroeconomic forces that have been driving the Indian economy during both the pre-reform and post-reform eras, that is, from 1950-1951 to 1990-1991 and from 1991-1992 to 2022-2023 respectively. Problem: The Indian economy underwent significant economic and financial sector reforms in 1991-92, with the goal of reviving its stagnant growth. These reforms are intended to spur the economic growth of India. What were the main forces behind the Indian economy before and after the reforms? Is the research question. The goal of the current study is to determine if the economic reforms shifted or maintained the pre-reform era’s driving forces for the Indian economy in the post-reform era. Design/Methodology/Approach: The gross domestic product (GDP), the gross domestic savings (GDS), the private consumption expenditure (PFCE), the government final consumption expenditure (GFCE), the inflation rate, the exchange rate, the exports, the imports, the internal and external borrowings of the government, personal remittances, foreign direct investment (FDI), and foreign portfolio investments (FPI) are all taken into consideration in order to fill the research gap that has been identified as a result of the comprehensive review of the literature. Following an analysis of the selected variables' fundamental characteristics, an econometric model is developed using the Autoregressive Distributed Lag (ARDL) Bounds Test Model. Findings: There is no evidence of long-run causation and association between the variables, but the findings of the ARDL Bounds Test showed that in the pre-reform period, PFCE is the major driver of the GDP in the short-run, with strong support from imports. However, since the reform, PFCE, GDS, and Exports are the primary short- and long-term contributors to GDP. Practical Implication: These findings indicate that India's macroeconomic system is shifting. The Indian economy has undergone a dramatic shift, moving away from a reliance on imports and toward one that is consumer-driven and export-driven. As savings and consumer expenditures are the main drivers of the Indian economy’s growth in the post-reform era, policies should be designed to increase savings and consumption as well as increase exports.

show abstract

Driving the pulse of the economy or the dilution effect: Inflation impacting economic growth

Cited by 13 publications

References 48 publications

The Effect of Inflation, Labor Force Participation Rate and Exports on Economic Growth in Indonesia

The Effect of Inflation, Labor Force Participation Rate and Exports on Economic Growth in Indonesia

Effectiveness of anti-inflation policy that ensures economic growth: Evidence from post-Soviet countries

Did the Economic Reforms Change the Macroeconomic Drivers of the Indian Economy in the Post-Reform Era? An ARDL Bounds Test Approach

Contact Info

Product

Resources

About