Inflation, economic growth, and environmental sustainability in Malaysia: Evidence from an ARDL approach

Abstract

This study examines the impact of inflation on economic growth in Malaysia using the Autoregressive Distributed Lag (ARDL) approach with annual data from 1990 to 2023. The analysis captures both short-run and long-run relationships, revealing that inflation exerts a significant negative effect on economic growth, with stronger adverse impacts in the long run. In the short run, the effect remains negative but less pronounced, suggesting partial economic adjustment to inflationary pressures. By incorporating carbon emissions as a control variable, the study accounts for environmental influences on economic performance, providing a more comprehensive understanding of the inflation–growth relationship. The findings contribute to the literature by integrating macroeconomic and environmental dimensions within a single framework and offer policy-relevant insights for managing inflation while promoting sustainable economic growth.