Open AccessImpact of Inflation Targeting Policy Framework of Countries between the Period of 2009-2019
Author(s) -
Ananda Rathnayake
Publication year - 2021
Publication title -
vidyodaya journal of management
Language(s) - English
Resource type - Journals
ISSN - 2448-9344
DOI - 10.31357/vjm.v7iii.5099
Subject(s) - economics , inflation (cosmology) , money supply , distributed lag , monetary policy , globe , context (archaeology) , monetary economics , developing country , inflation targeting , monetarism , macroeconomics , deflation , short run , econometrics , economic growth , medicine , paleontology , physics , biology , theoretical physics , ophthalmology
Today, many countries in the world tend to choose Inflation Targeting Monetary Policy Framework, in which context it has become a matter of debate whether inflation or economic growth is driven by monetary expansions. The common acceptance is that inflation is created by the continuous rise in the money supply which is strongly proved through the economic theories forwarded by Karl Marx, Irvin Fisher and Friedman. The main aim of the study is to examine the relationship between money supply and economic growth under a broad phenomenon by utilizing the countries with inflation targeting policies in action. The time-series data have been collected from different countries that exercise inflation targeting from 2009 to 2019 and the sample included 39 countries from all over the globe, both from developed and developing categories. The utilized Autoregressive Distribution Lag (ARDL) model forwarded the results suggesting that there is a significant negative relationship between the economic growth and money supply in the long run while no relationship has been observed in the short run.