Social Sciences
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Item Impact of inflation on growth: with reference to Sri Lanka(Research Centre for Social Sciences, Faculty of Social Sciences, University of Kelaniya, Sri Lanka, 2016) Semasinghe, W.M.Inflation is one of the greatly discussed economic variables which make significant impact on many macroeconomic variables including growth, employment, import, export, investment, savings and money supply. Very high as well as very low rate of inflation are detrimental to economic performance. However, there is no consensus among economists over the precise rate of inflation which favorable to an economy. As literature reveals, the relationship between inflation and economic growth has been at the center of the macroeconomic policy debate since 1960s. Numerous empirical analysis have been documented on the relationship between these two variables and have arrived different conclusions. The aim of this paper is to evaluate the impact of inflation on economic growth in Sri Lanka. During the past seven decades since independence, successive governments have adopted different policy instruments for the economic progress of the country. Hence, the present paper intended to examine the relationship between inflation and growth at the different policy regimes. The analysis mainly relied on quantitative approach and secondary data collected from the Department of Census and Statistics and Central Bank of Sri Lanka were employed. Multivariable regression analysis was used to examine the relationship between inflation and selected macroeconomic variables. Based on the empirical results, the study concluded that there is a positive relationship between inflation and growth, but the relationship is not strong in the period covered by the analysis. Only during the seven year period from 1970-77 that has adopted closed economic policy framework has established a relatively high relationship between the two.Item Output, Stock Volatility and Political Uncertainty: Evidence from Sri Lanka(University of Kelaniya, 2005) Weerakoon Banda, Y.K.; Abeywardhana, D.K.Y.The purpose of this study is to investigate the relationship between stock return volatility, political uncertainty, macroeconomic variables and output. Why does stock volatility increase when output declines? Theory of investment under uncertainty implies that political uncertainty may simultaneously increase volatility and reduce output. Though the basic facts are well-established, the causal link between volatility and business slumps is unclear. Slumps may cause volatility, volatility may cause slumps, or both may be the consequence of some other more clearly exogenous factors. The study examines the explanatory power of the selected variables to explain the output over a period from 1998 to 2003 using multiple regression approach. Monthly secondary data are gathered from Colombo Stock Exchange, Central Bank of Sri Lanka, Elections Department and Department of Police. Eight important variables have been identified for the study namely, stock return volatility, changes in share price, political uncertainty, inflation rate, exchange rate and treasury bill rate. Descriptive statistics and regression analysis were carried out to analyze the data. Regression analysis was carried out for the periods before and after the peace process. The results of the study show that three variables indicate a significant impact on the output. Study indicates two general conclusions. First, the existence of stock return volatility, share price changes and political uncertainty affect the output. Second, the existence of such environments i.e., politically uncertain and volatile stock market reveals that some unexplained factors affect the output. However, political uncertainty hypothesis is not statistically significant but the coefficients are negative as assumed in the valuation model. However, taking all the variables together in the model explains more than moderate level change in output.