International Trade, Economic Development, and Inflation: Panel Data Analysis from South Asian Economies

Abstract

The current study aims to empirically explore the association among these complex issues and tackle the problem of endogeniety for the South Asian economies. The achievement of maximum gains from international trade, accelerated economic development, and price stability are the most ambitious macro-economic goals across the developing world. The study has conducted panel data analysis by applying the Three-Stage Least Square (3SLS) technique for the period 1990–2024. Findings have professed that inflation and economic development positively related with international trade, inflation is negatively associated with economic development, and international trade is positively linked with economic development, economic development and inflation are negatively related, while there is positive association between international trade and inflation. The study has suggested that South Asian authorities should devise such types of policies that focus on accelerating economic growth, removing trade barriers, and condensing inflationary pressure to a moderate level.