Essay On Inflation And Economic Growth
Many studies have been discussed on the issue of inflation and economic growth. We have reviewed a few journals published in different parts of the world regarding this topic to develop objectives in the context of Malaysia and to further analyze it to draw some important conclusions and policy recommendations.
Barro (1995) investigates the issue and finds a fundamental negative relationship between inflation and economic growth, considering variables like fertility rate, education, etc constant. A large sample data of more than 100 economies had been collected for the period 1960 to 1990 and to determine the effects of inflation on growth, a system of regression equations is used, in which many other determinants of growth are held constant.
The issue of inflation and growth had been addressed by Bruno and
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1992; Ghatak 1995 stated that there is a clear relationship between money and economic growth agreed by modern macroeconomics theories. Mean growth of real output on a number of suggested macroeconomic determinants of growth (mean of money supply growth and standard deviation of money supply) is regressed by Kormendi and Meguire (1985) in a cross-section analysis.
A set of data of 62 countries is used by Dwyer and Hafer (1988) which resulted to a result of negative relationship between the coefficient of money growth rate and real income growth rate.
Bende et al. (2001) examined the FDI consequences on ASEAN-5 economic growth in between 1970-1996. The study showed that FDI increased the economic growth either directly or through spillover effects. It is a positive relationship for Indonesia, Malaysia, and Philippines, while they find a negative relationship for Singapore and
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