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Abstract

The causality test based on the ECM revealed a bidirectional causal relationship between the exchange rate and the inflation rate ( CPI ). Additionally, the results indicated a unidirectional causal relationship stemming from the broad money supply ( M2 ) toward both the CPI and the exchange rate ( E ). Based on these findings, the study concludes that fluctuations in broad money supply growth and changes in the exchange rate (devaluation) significantly explain the dynamics of inflation in both the short and long run.

DOI

10.33095/jeas.v26i117.1829

Subject Area

Accounting

First Page

546

Last Page

569

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