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Budget deficits and inflation in thirteen Asian developing countries


Habibullah, Muzafar Shah and Chee, Kok Cheah and Abdul Hamid, Baharom (2011) Budget deficits and inflation in thirteen Asian developing countries. International Journal of Business and Social Science, 2 (9). pp. 192-204. ISSN 2219-1933; ESSN: 2219-6021


In this study we attempt to determine the long-run relationship between budget deficit and inflation in thirteen Asian developing countries, namely; Indonesia, Malaysia, the Philippines, Myanmar, Singapore, Thailand, India, South Korea, Pakistan, Sri Lanka, Taiwan, Nepal and Bangladesh. Using annual data for the period 1950-1999 our Granger causality within the error-correction model (ECM) framework suggest that all variables involved (budget deficits, money supply and inflation) are integrated of order one. Our ECM model estimates indicate the existence of a long-run relationship between inflation and budget deficits. Thus, we conclude that budget deficits are inflationary in Asian developing countries.

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Official URL or Download Paper: http://ijbssnet.com/journal/index/376

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Center for Promoting Ideas
Keywords: Granger causality; Asian countries; Budget deficit
Depositing User: Azana Abd Hadi
Date Deposited: 10 Feb 2015 07:55
Last Modified: 14 Sep 2015 01:02
URI: http://psasir.upm.edu.my/id/eprint/22789
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