Investigating the root of inflation in Sri Lanka–Money supply or exchange rate?
In 2022, Sri Lanka faced a severe financial crisis coupled with high inflation that peaked at 70% year-over-year. While the dominant public discourse blames governments ‘printing too much money’ as the cause for inflation, monetary expansion is not the only way to explain uncontrolled price rises. This project examines the Sri Lankan case through two antagonistic theoretical explanations of inflation using quantitative data, political economy analysis, and econometric tools.