Impact of Fiscal Deficit on Inflation in Sri Lanka: An Econometric Time Series Analysis

Aslam, A.L.M.; Ahamed Lebbe, S.M.

doi:10.18052/www.scipress.com/ILSHS.70.8

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Impact of Fiscal Deficit on Inflation in Sri Lanka: An Econometric Time Series Analysis

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Abstract:

There is a relationship between the fiscal deficit and inflation, which was confirmed empirically in several studies conducted in many countries. Sri Lanka has been encountering the problem of inflation for the recent years. But in Sri Lanka, this proposition has not yet been studied scientifically. Therefore, this study was going to fill this gap. The objective of this study was to test the impact of fiscal deficit on inflation in Sri Lanka. For this study, the annual time series data were used during the period of 1959 to 2013. The fiscal deficit, exchange rate, government expenditures and import outflow were used as independent variables while the Colombo consumer price index was considered as dependent variable. In addition, the multiple regressions model was used to test the impact of fiscal deficit on inflation. Based on the regression results, the fiscal deficit preserved the positive relationship with inflation in Sri Lanka at one percent significant level. Therefore, this study confirmed that the fiscal deficit accelerates the inflation in Sri Lanka.

Info:

Periodical:

International Letters of Social and Humanistic Sciences (Volume 70)

Pages:

8-13

DOI:

https://doi.org/10.18052/www.scipress.com/ILSHS.70.8

Citation:

A.L.M. Aslam and S.M. Ahamed Lebbe, "Impact of Fiscal Deficit on Inflation in Sri Lanka: An Econometric Time Series Analysis", International Letters of Social and Humanistic Sciences, Vol. 70, pp. 8-13, 2016

Online since:

June 2016

Authors:

A.L.M. Aslam, S.M. Ahamed Lebbe

Keywords:

Fiscal Deficit, Government Expenditure, Government Revenue, Inflation, Multiple Regression, Time Series Data

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Distribution:

Open Access

This work is licensed under a
Creative Commons Attribution 4.0 International License

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Cited By:

[1] M. ATGÜR, "TÜRKİYE’DE KAMU KESİMİ BÜTÇE AÇIKLARI VE ENFLASYON İLİŞKİSİNİN ARDL SINIR TESTİ YÖNTEMİ KULLANILARAK İNCELENMESİ", Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Dergisi, 2021

DOI: https://doi.org/10.37880/cumuiibf.623247