Munich Personal RePEc Archive

How the banking system is creating a two-way inflation in an economy

Nizam, Ahmed Mehedi (2020): How the banking system is creating a two-way inflation in an economy. Published in: PLoS ONE 15(4): e0229937, DOI: https://doi.org/10.1371/journal.pone.0229937 (2 April 2020)

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Abstract

Here we argue that due to the difference between real GDP growth rate and nominal deposit rate, a demand pull inflation is induced into the economy. On the other hand, due to the difference between real GDP growth rate and nominal lending rate, a cost push inflation is created. We compare the performance of our proposed model to the Fisherian one by using Toda and Yamamoto approach of testing Granger Causality in the context of non-stationary data. We then use ARDL Bounds Testing approach to cross-check the results obtained from T-Y approach.

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