Dynamic Linkages between Food Inflation and Its Volatility: Evidence from Sri Lankan Economy

The study investigates the impact of inflation rate on economic growth to find the best-fit model for economic growth in Vietnam. The study applied Vector Autoregressive (VAR), cointegration models, and unit root test for the time-series data from 1996 to 2018 to test the inflation impact on the economic growth in the short and long term. The study showed that the two variables are stationary at lag first difference I(1) with 1%, 5% and 10%; trace test indicates two cointegrating equations at the 0.05 level, the INF does not granger cause GDP, the optimal lag I(1) and the variables are closely related as R2 is 72%. It finds that the VAR model's results are the basis to perform economic growth; besides, the inflation rate is positively related to economic growth. The results support the monetary policy. This study identifies issues for Government to consider: have a comprehensive solution among macroeconomic policies, monetary policy, fiscal policy and other policies to control and maintain the inflation and stimulate growth; set a priority goal for sustainable economic growth; not pursue economic growth by maintaining the inflation rate in the long term, but take appropriate measures to stabilize the inflation at the best-fitted VAR forecast model.

Section: Literature Reviewmentioning

confidence: 99%

Impulse Response of Inflation to Economic Growth Dynamics: VAR Model Analysis

Dinh¹

2020

“…However, the authors' results were a negative inflation-growth relationship that was found to exist in the economy of Pakistan (Muhammad, Imran, & Fatima, 2011). There are some research topics on inflation and economic growth that showed that inflation impacts on each countries' different economic growth, which belongs to each countries' monetary policy (Mustafa & Sivarajasingham, 2019;Wulandari, Utomo, Narmaditya, & Kamaludin, 2019;Bong & Premaratne, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Inflation Threshold and Economic Growth: Ordinal Regression Model Analysis

Dinh¹

2020

The study investigates the relationship between the inflation rate and economic growth to find out the optimal inflation threshold for economic growth. Therefore, this study applied an ordinary least square model (OLS) and the ordinal regression model, and collected the time-series data from 1996 to 2017 to test the relationship between inflation and economic growth in the short-term and long-term. The sample fits the model and is statistically significant. The study showed that 96.6% of correlation between inflation rate and economic growth are close and 4.5% of optimal inflation threshold is appropriate for economic growth. It finds that the optimal inflation threshold is base to perform economic growth, besides the inflation rate is positively related to economic growth. The results support the monetary policy appropriately. This study identifies issues for Government to consider: have a comprehensive solution among macroeconomic policies, monetary policy, fiscal policy and other policies to control and maintain the inflation and stimulate growth; have appropriate policies to regulate inflation to stimulate economic growth over the long term; set a priority goal for sustainable economic growth; not pursue economic growth by maintaining the inflation rate in the long term, but take appropriate measures to stabilize the inflation at the optimal inflation threshold.

“…Food commodities, particularly rice, are increasingly expensive and are predicted to lead to fluctuations that can be risky for consumers, producers, and the government (Mustafa & Sivarajasingham, 2019). The fluctuations from the calculation of a price that does not reflect a market performance will lead to mistakes in policymaking by the government as the regulator.…”

Section: Introductionmentioning

confidence: 99%

Nexus between Production Input and Price Commodity: An Integration Analysis of Rice Barns in East Java of Indonesia

Wulandari¹,

Narmaditya²,

Prayitno³

et al. 2020

This study aims to examine the causality between production input and the price of rice in East Java, Indonesia. This study applied a quantitative method to understand in a comprehensive way the correlation between variables. The data used for this study were collected from several sources, including East Java Agriculture Office, Siskaperbapo.com, and Statistics Indonesia (BPS) of East Java. This research was carried out over five years, starting from 2014 to 2018. Furthermore, the data were analyzed using the Vector Error Correction Model (VECM) by employing E-Views (version 7). The findings of this study indicated that, in the long run, the population, rice production, and changes in people's income have a positive effect on price stability, but are inversely proportional if seen in the short term. In comparison, in the long run, farmer exchange rates variable has a negative impact on price stability, and inversely proportional in the short term, which has a positive effect. There are different implications when the people's income increases and the rice price declines; these have great potential to alleviate poverty in East Java, Indonesia. This is due to the fact that the price stability also concerns the welfare of the community.