ItemArticle

Shrinking Sizes, Swelling Prices: Evaluating the Ripple Effects of Inflation and Shrinkflation on Economic Growth Using Dynamic Panel Framework

Title
Shrinking Sizes, Swelling Prices: Evaluating the Ripple Effects of Inflation and Shrinkflation on Economic Growth Using Dynamic Panel Framework
Creator
Bashir, Shahid; Joby, Aleena; Wani, Farhana; Bhat, Mudaser Ahad; Alam, Tosib
Description
This study used the novel cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model and the JuodisKaraviasSarafidis (JKS) causality test to investigate the intricate nexus between inflation, shrinkflation, and economic growth in 20 countries from 1990 to 2022. The results validated the detrimental effects of inflation and shrinkflation on economic growth, underlining price stability, and reverse or positive shrinkflation as crucial for sustained expansion. Causality analysis further revealed feedback causality between inflation and economic growth. Finally, our findings solidify the quantity-led growth or value-driven growth hypothesis. Reverse shrinkflation, or growth driven by value, drives economic growth unidirectionally. Consumption expenditure increases as the value or quantity of goods and services increase, which boosts consumption, aggregate demand, and economic growth. Hence, to stimulate sustainable economic growth, policymakers should implement prudent monetary policies to control high inflation, a major contributor to shrinkflation. Additionally, industries should be encouraged to enhance productivity and reduce manufacturing costs without sacrificing product size or quality. Lastly, it is essential to monitor pricing changes in critical industries and intervene if unjustified shrinkflation trends emerge. 2025 Emerging Markets Institute, Beijing Normal University
Source
Global Journal of Emerging Market Economies;Volume;18;Issue;1;pp.29-50
Date
01-01-2026
Publisher
SAGE Publications Ltd
Subject
C13; cross-sectionally augmented autoregressive distributed lag; E31; economic growth; F43; Inflation; JuodisKaraviasSarafidis causality; shrinkflation; trade openness
Coverage
Bashir S., School of Management, Mahindra University, Telangana, Hyderabad, India; Joby A., Christ University, Pune Lavasa Campus, Maharashtra, Lavasa, India; Wani F., Central University of Kashmir, Jammu and Kashmir, Ganderbal, India; Bhat M.A., Department of Higher Education, GDC Khansahib, Budgam, Jammu and Kashmir, India; Alam T., Department of Economics, Central University of Kashmir, Jammu and Kashmir, Ganderbal, India
Rights
Restricted Access; Hardcopy may be available in the library
Relation
ISSN: 9749101;
Format
online
Language
English
Type
Article

Citation

Bashir, Shahid; Joby, Aleena; Wani, Farhana; Bhat, Mudaser Ahad; Alam, Tosib, “Shrinking Sizes, Swelling Prices: Evaluating the Ripple Effects of Inflation and Shrinkflation on Economic Growth Using Dynamic Panel Framework,” CHRIST (Deemed To Be University) Institutional Repository, accessed June 18, 2026, https://archives.christuniversity.in/items/show/23153.

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