Demand-Driven Factors of Inflation in Sri Lanka: An ARDL Approach

Inflation in Sri Lanka has been one of the country’s major macroeconomic issues, especially since 1977. caused due to various factors. The present study analyses demand-driven factors inflation Lanka. time-series data is used identify such factors, applying ARDL technique determine long-run and short-run relationships during 1977-2019 sampling period. X. were real GDP, fiscal deficit, 91-days treasury bills rate, broad money supply. On other hand, imports, budgetary supply, wages private sector government sector. findings suggest that both determinants impact As such, Treasury bill supply explain long run. Real GDP a significant on run than rate. In addition, also significantly would be helpful for policymakers their efforts control by maintaining price stability sustainably.