Impact of Inflation on Economic Growth in Sri Lanka

M. W. Madurapperuma

doi:doi:10.11648/j.jwer.20160501.11

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Impact of Inflation on Economic Growth in Sri Lanka

M. W. Madurapperuma

Published in Journal of World Economic Research (Volume 5, Issue 1)

Received: 25 April 2016 Accepted: 4 May 2016 Published: 4 June 2016

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Abstract

It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country. Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. The aim of this study is to examine the impact of inflation on economic growth in Sri Lanka for the period of 1988 – 2015 using the framework of Johansen cointegration test and Error Correction model. The results show that there is a long run negative and significant relationship between economic growth and inflation in Sri Lanka. These results support with the model of utility functions in consumption and real money balances, as exposed by Fischer (1979); De Gregorio (19930; Bruno & Easterly (1998) and disagree with the findings of Sidrauski’s (1967) super neutrality of money in the long run. The results are more likely to support the utility functions in real money balances and consumption.

Published in	Journal of World Economic Research (Volume 5, Issue 1)
DOI	10.11648/j.jwer.20160501.11
Page(s)	1-7
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Inflation, Economic Growth, Cointegration, Error Correction Model, Sri Lanka

References

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M. W. Madurapperuma. (2016). Impact of Inflation on Economic Growth in Sri Lanka. Journal of World Economic Research, 5(1), 1-7. https://doi.org/10.11648/j.jwer.20160501.11

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ACS Style

M. W. Madurapperuma. Impact of Inflation on Economic Growth in Sri Lanka. J. World Econ. Res. 2016, 5(1), 1-7. doi: 10.11648/j.jwer.20160501.11

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AMA Style

M. W. Madurapperuma. Impact of Inflation on Economic Growth in Sri Lanka. J World Econ Res. 2016;5(1):1-7. doi: 10.11648/j.jwer.20160501.11

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@article{10.11648/j.jwer.20160501.11,
  author = {M. W. Madurapperuma},
  title = {Impact of Inflation on Economic Growth in Sri Lanka},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {1},
  pages = {1-7},
  doi = {10.11648/j.jwer.20160501.11},
  url = {https://doi.org/10.11648/j.jwer.20160501.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160501.11},
  abstract = {It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country. Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. The aim of this study is to examine the impact of inflation on economic growth in Sri Lanka for the period of 1988 – 2015 using the framework of Johansen cointegration test and Error Correction model. The results show that there is a long run negative and significant relationship between economic growth and inflation in Sri Lanka. These results support with the model of utility functions in consumption and real money balances, as exposed by Fischer (1979); De Gregorio (19930; Bruno & Easterly (1998) and disagree with the findings of Sidrauski’s (1967) super neutrality of money in the long run. The results are more likely to support the utility functions in real money balances and consumption.},
 year = {2016}
}

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TY  - JOUR
T1  - Impact of Inflation on Economic Growth in Sri Lanka
AU  - M. W. Madurapperuma
Y1  - 2016/06/04
PY  - 2016
N1  - https://doi.org/10.11648/j.jwer.20160501.11
DO  - 10.11648/j.jwer.20160501.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 1
EP  - 7
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160501.11
AB  - It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country. Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. The aim of this study is to examine the impact of inflation on economic growth in Sri Lanka for the period of 1988 – 2015 using the framework of Johansen cointegration test and Error Correction model. The results show that there is a long run negative and significant relationship between economic growth and inflation in Sri Lanka. These results support with the model of utility functions in consumption and real money balances, as exposed by Fischer (1979); De Gregorio (19930; Bruno & Easterly (1998) and disagree with the findings of Sidrauski’s (1967) super neutrality of money in the long run. The results are more likely to support the utility functions in real money balances and consumption.
VL  - 5
IS  - 1
ER  -

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Author Information

M. W. Madurapperuma

Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Kelaniya, Sri Lanka

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APA Style

M. W. Madurapperuma. (2016). Impact of Inflation on Economic Growth in Sri Lanka. Journal of World Economic Research, 5(1), 1-7. https://doi.org/10.11648/j.jwer.20160501.11

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ACS Style

M. W. Madurapperuma. Impact of Inflation on Economic Growth in Sri Lanka. J. World Econ. Res. 2016, 5(1), 1-7. doi: 10.11648/j.jwer.20160501.11

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AMA Style

M. W. Madurapperuma. Impact of Inflation on Economic Growth in Sri Lanka. J World Econ Res. 2016;5(1):1-7. doi: 10.11648/j.jwer.20160501.11

Copy | Download

@article{10.11648/j.jwer.20160501.11,
  author = {M. W. Madurapperuma},
  title = {Impact of Inflation on Economic Growth in Sri Lanka},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {1},
  pages = {1-7},
  doi = {10.11648/j.jwer.20160501.11},
  url = {https://doi.org/10.11648/j.jwer.20160501.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160501.11},
  abstract = {It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country. Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. The aim of this study is to examine the impact of inflation on economic growth in Sri Lanka for the period of 1988 – 2015 using the framework of Johansen cointegration test and Error Correction model. The results show that there is a long run negative and significant relationship between economic growth and inflation in Sri Lanka. These results support with the model of utility functions in consumption and real money balances, as exposed by Fischer (1979); De Gregorio (19930; Bruno & Easterly (1998) and disagree with the findings of Sidrauski’s (1967) super neutrality of money in the long run. The results are more likely to support the utility functions in real money balances and consumption.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Impact of Inflation on Economic Growth in Sri Lanka
AU  - M. W. Madurapperuma
Y1  - 2016/06/04
PY  - 2016
N1  - https://doi.org/10.11648/j.jwer.20160501.11
DO  - 10.11648/j.jwer.20160501.11
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 1
EP  - 7
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160501.11
AB  - It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country. Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. The aim of this study is to examine the impact of inflation on economic growth in Sri Lanka for the period of 1988 – 2015 using the framework of Johansen cointegration test and Error Correction model. The results show that there is a long run negative and significant relationship between economic growth and inflation in Sri Lanka. These results support with the model of utility functions in consumption and real money balances, as exposed by Fischer (1979); De Gregorio (19930; Bruno & Easterly (1998) and disagree with the findings of Sidrauski’s (1967) super neutrality of money in the long run. The results are more likely to support the utility functions in real money balances and consumption.
VL  - 5
IS  - 1
ER  -

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