DOI: https://doi.org/10.59321/BAUETJ.V4I1.27
AUTHOR(S)
Mohammod Ullah1*, Md. Jahedul Islam2
ABSTRACT
This paper delves into the factors that influences the inflationary scenario in Bangladesh, with a focus on both internal and external factors. Using monthly data from July 2012 to April 2023, An Autoregressive Distributed Lag (ARDL) model is employed to investigate the impact of external factors such as global energy price, global food price as well as internal factors such as money supply, gross domestic product (GDP) and exchange rate on inflation in Bangladesh. The findings suggest that both external and internal factors play important roles in shaping inflation rates in Bangladesh. Specifically, changes in world food prices and domestic money supply have a positive significance impact on inflation rates. Multiple diagnostic tests confirm the model is stable, normal, and free of serial autocorrelation or heteroscedasticity concerns. The results have important implications for policymakers in Bangladesh, who must be aware of the various factors that can influence inflation rates and implement policies to mitigate their impact.