Do Inflation And Its Volatility Impact On Economic Growth Rate In Myanmar?

Author : Si Thu Kyaw

Volume : IEJ Vol.1 No.1

Published Date : October, 2017


The aim of this paper is to examine the volatility of inflation and impacts of inflation on economic growth of Myanmar using the yearly data over the period of 1980 to 2014. Inflation volatility is estimated by developing ARMA (2, 2)-GARCH (1, 1) model which is the fitted model for forecasting inflation volatility according to AIC and SIC values and Engle and Granger co-integration is used to estimate the long run relationship between inflation, inflation volatility, higher and lower inflation and economic growth rate. Finally, the empirical results examine that inflation volatility is forecasted by ARMA (2, 2)-GARCH (1, 1) model and there is inflation volatility in Myanmar economy. The inflation volatility positively influences on economic growth rate. The results suggest that inflation volatility and economic growth rate have long run relationship and co-integration. Keywords: Economic growth, ARMA, GARCH, Inflation, Co-integration, Forecasting JEL Classification: E310, E370, C220