Exploring the Nexus between Money Supply and Interest Rates: A Focus on Bangladesh
Asma Akter
Abstract
Theoretically, money supply and interest rates are interrelated. The purpose of this study is to examine the relationship between money supply and interest rates from the perspective of Bangladesh. Using yearly time series data, this paper employs the Autoregressive Distributed Lag Model and Bound test. The main findings of the study indicate both long-run and short-run positive correlations between these variables. So, to formulate the monetary policy for our country, policymakers should consider the empirical evidence of the positive correlation between money supply and interest rate. This study has significant policy implications for shaping the monetary policy of Bangladesh.