GOOD GOVERNANCE AS A TOOL TO COMBAT INFLATION

Now a day’s good governance is a burning issue of the modern world. Good governance helps maintain social equality as well as economic growth. The paper is presents the effect of good governance on inflation. Good Governance is divided into three basic dimensions; Economic Governance, Political Governance and Institutional Governance while each dimension is further divided into two dimension. The data used in this paper is time series data, “world governance indicators” presented by Kaufmann et al., which is Upper bound of 90% confidence interval for governance, in percentile rank terms. By using methodology of Engle Granger it is found that every dimension of basic dimension has short run as well as long run relationship with inflation.