Inflation and Economic Growth in Bangladesh: Evidence from Time-Series Analysis

Abstract

Bangladesh has been experiencing an unstable inflation rate since its independence and the high inflation rate has become one of the major issues of Bangladesh economy. The impact of inflation on economic growth, however it remains controversial in both theory and empirical findings. This work attempted to provide an investigation regarding the effects of inflation on economic growth of Bangladesh. The secondary data of inflation rate, economic growth and other factors were collected from various sources such as (1) Bangladesh Bureau of Statistics (BBS) (2) Bangladesh Bank and (3) World Development Indicator (WDI) compiled by the World Bank. Descriptive and correlation analyses, OLS-based regression models, and time-series diagnostic techniques including CUSUM stability test, structural break analysis, threshold analysis, cointegration test and causality test were used to determine the effects of inflation on economic growth and to identify the direction of causality between them. The resulting outcomes of this research highlight some guidelines to the suitable inflation related policies for Bangladesh.

Keywords: Real Inflation, GDP growth, long-run relationship, Significant Improvement.

DOI: 10.7176/EJBM/18-9-11

Publication date: September 30^th 2026