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Impact of fiscal imbalance on interest rate in Sri Lanka
[journal article]
Abstract Interest rate is one of the primary tools in the monetary policy which moves the countries' economy into positive or negative path. In the meantime, the fiscal imbalance keeps a bond on the interest rate of countries. Empirically, this study tested the impact of fiscal imbalance on the interest rate... view more
Interest rate is one of the primary tools in the monetary policy which moves the countries' economy into positive or negative path. In the meantime, the fiscal imbalance keeps a bond on the interest rate of countries. Empirically, this study tested the impact of fiscal imbalance on the interest rate in Sri Lanka using the annual time series data from the period of 1959 to 2014. In this study, the fiscal imbalance was considered as the independent variable and the interest rate was used as the independent variable. While the money supply and the inflation rates were utilized as controlled variables. To test this impact, the multiple regressions model was employed. Based on the regression outcome, the fiscal imbalance positively maintained the relationship on the interest rate at one percent level.... view less
Keywords
Sri Lanka; economy; monetary policy; inflation; taxes; interest rate
Classification
Economic Policy
Public Finance
Document language
English
Publication Year
2016
Page/Pages
p. 24-28
Journal
International Letters of Social and Humanistic Sciences (2016) 73
ISSN
2300-2697
Status
Published Version; peer reviewed