Inflation Relationship with the Economic Growth of the World Economy

Abstract

The study was carried out in Feb, 2020. The major objective was to see the relationship of inflation with economic growth in the world economy. Total 42 articles were downloaded from the net and were read 10 to 20 times each article and draw the conclusion. The result indicates that different variables such as import price, demand of goods, production of goods, fiscal policy, and monetary policy and deficit budget affect the inflation positively and negatively in the world. Latter on high inflation affect the economic growth negatively while it was also noted that below 3 to 7 percent inflation is beneficial for the economic growth of a country because with this growth the world producers produce more production which later on fit other machinery and solve the problem of the unemployment. So inflation, economic growth and unemployment also correlated with one another and affect one another for economic growth of the country. Less inflation is beneficial for economic growth in the world while higher inflation is dangerous for economic growth of the world. Therefore each country of the world try to keep their inflation at below the thresh hold level at their country for increasing their economic growth. Inflation is positively related with the employment in the short run while latter on in the long run negatively. So the inflation example is as blood pressure is in the human being. So hyper inflation affects the economic growth negatively, while below the threshold it affects positively. When the policy maker of the world makes the policy, they see to all sectors of the economy and formulate the policy for the future. The major objective is how to increase the economic growth of the country for their countries prosperity. The developed countries of the world make good policy for their economic growth uplifting while the developing failed in good policy preparation due to lack of fund and deficit budget and dependency on the IMF and World Bank. On the basis of problems the study recommended that to appoint a talented and experience person as a governor for their countries banks in the world to properly manage the funds of their countries and make best policy for their utilization for high economic growth. The in and out of the country should be controlled and also keep eye on every items because everything supply increase and decrease affect the inflation positively and negatively in the world. Highly focus on the inflation flow in the country and keep eye on the factors which affect the inflation in the long and short run. Budget should be kept always balance and never depend on the other country fund because it will make the country slave and they their selves make this country for their own benefit and also they interfere in their country business. Mostly increase the development budget at their countries and squeeze the non developmental budget at their countries because it play great role in the inflation and unemployment control and economic growth enhancement.

Keywords: Inflation, Relation, Economic Growth, World Economy