Inflation, Economic Growth and Government Expenditure in Bangladesh: An Empirical Analysis 2016 – 2020

Abstract

The purpose of this study is establish to the effect of inflation and government expenditure on economic growth in Bangladesh. The study focused total of five (05) years in the period of (2015-2016) fiscal year to (2019-2020) fiscal year after major liberalization of trade took place in Bangladesh. In this paper, we want to look into the impact of Bangladesh government expenditure on growth of economic using time series data from 2016 to 2020 fiscal years. We used Secondary data and it was obtained from various sources like the Bangladesh Bureau of Statistics (BBS), Bangladesh Bank (BB) and Asian Development Bank (ADB), and World Development Indicators of the World Bank. Econometrics tools like ADF (Augmented Dickey-Fuller) unit root test, ECM (Error Correction Model) and Engel-Granger Cointegration test to estimate the short and long run association in the model are used to investigate such relationship. We use E-views 10 tools to calculate the above test. From the result of the study, we can say that a long-term relationship among the govt. expenditure, inflation and rate of economic growth. Also suggested that, when the association among economic growth and govt. expenditure is positive then economic growth and inflation are negative.