Özet:

Inflation, money supply and budget deficit are very important macroeconomic variables. In this study, it is tried to find out relationship among these variables. For this purpose the annual data ranging from 1980 to 2015 has been taken. Augmented Dicky Fuller (ADF) unit root test suggest that data is non-stationary at level. So interdependence of every variable on other two variables is checked through OLS and Granger Causality test. The bi-directional causality is found between inflation and money supply while unidirectional causality is run from budget deficit to inflation. Similarly the causality is run unidirectional from budget deficit to money supply. It is suggested that the government is needed to control the expenditure or increase revenues to minimize the volume of budget deficit as it is the cause of inflation.

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