http://drr.vau.ac.lk/handle/123456789/1552 Undergraduate Research Session on Business Economics Sat, 04 Apr 2026 08:00:19 GMT 2026-04-04T08:00:19Z http://drr.vau.ac.lk/handle/123456789/1547 Do Food and Non-Food Price Volatility Granger Causes Inflation Volatility in Sri Lanka ? Gayathiri, B. Price volatility has become a growing concern in Sri Lanka due to its direct impact on inflation and household welfare. In particular, fluctuations in food and non-food prices, along with exchange rate instability, have contributed to persistent inflationary pressures in recent years. This study examines the dynamic causal relationship between food and nonfood price volatility, and inflation volatility in Sri Lanka, using monthly data from January 2014 to April 2025. Data on the National Consumer Price Index (NCPI), Food NCPI, Nonfood NCPI, and Exchange Rate were collected from the Department of Census and Statistics (DCS) and the Central Bank report. All the variables were transformed into volatility series. The stationarity of the data series was tested using both the Augmented Dickey-Fuller (ADF) test and the Kwiatkowski Phillips Schmidt Shin (KPSS) test, confirming that all variables are stationary at level [I(0)]. The confidence ellipse curve illustrates a strong positive relationship between food volatility, non-food volatility, and inflation volatility. The results indicate that food price volatility is more closely associated with inflation volatility than nonfood price volatility. Additionally, the results of the Granger causality test show there is a bidirectional causal relationship between food volatility and inflation volatility, while no significant causality is observed between non-food volatility and inflation volatility. The findings suggest that policymakers should priorities food price stabilization through agricultural reform when designing effective monetary and inflation targeting policies. Wed, 01 Jan 2025 00:00:00 GMT http://drr.vau.ac.lk/handle/123456789/1547 2025-01-01T00:00:00Z http://drr.vau.ac.lk/handle/123456789/1546 Labor migration and its impact on Economic growth In Sri Lanka Deshapriya, C.S.A.T.S. This study examines the multifaceted relationship between labor migration and economic growth in Sri Lanka over the period 1990–2023, a context where remittances play a critical role in sustaining the balance of payments, household incomes, and foreign reserves. Utilizing time-series data and the Autoregressive Distributed Lag (ARDL) model, the research evaluates both the short-run and long-run impacts of labor outmigration on macroeconomic performance, incorporating key variables such as remittance inflows, labor force participation, gross capital formation, and inflation in relation to GDP growth. The empirical findings reveal that remittances exert a statistically significant positive influence on long-term economic growth, underscoring their role as a vital external financial resource that supports household consumption and investment. However, excessive outmigration, particularly of skilled and semi-skilled workers, poses risks to domestic productivity and innovation potential, raising concerns about long-term growth sustainability. Inflation is found to negatively affect economic growth, while gross capital formation and labor force participation contribute positively, highlighting the importance of a balanced macroeconomic environment in leveraging the benefits of labor migration. Diagnostic and stability tests confirm the robustness of the model, ensuring the reliability of the results. Based on these insights, the study recommends a multi-pronged policy framework that promotes the productive use of remittances, strengthens reintegration mechanisms for return migrants, and ensures macroeconomic stability to mitigate the adverse impacts of excessive labor outflows. Additionally, fostering financial inclusion and institutional support for migrants can enhance the developmental impact of labor migration. This research contributes to the broader discourse on migration and development by providing empirical evidence to guide policies aimed at optimizing labor migration as a tool for sustainable and inclusive economic growth in Sri Lanka. Wed, 01 Jan 2025 00:00:00 GMT http://drr.vau.ac.lk/handle/123456789/1546 2025-01-01T00:00:00Z http://drr.vau.ac.lk/handle/123456789/1545 Stock Price Prediction Using MIDAS Regression in the Colombo Stock Exchange, Sri Lanka Manokar, S. The Colombo Stock Exchange (CSE) experiences frequent fluctuations driven by political and economic factors, which undermine investor confidence and complicate investment decisions. The objective of this research is to evaluate the forecasting accuracy of the Mixed Data Sampling (MIDAS) model in predicting the All Share Price Index (ASPI) within the Sri Lankan context. This study employs the Mixed Data Sampling (MIDAS) model to forecast stock prices using the All Share Price Index (ASPI) and the Standing Lending Facility Rate (SLFR) as key variables. Monthly ASPI and quarterly SLFR data from January 2018 to December 2024 were utilized. The MIDAS regression is estimated using polynomial lag structures to capture the delayed impact of interest rate changes on stock market performance. Unit root test, including the ADF & PP results, confirmed that all variables are integrated of order one (I(1)). The MIDAS model was then used to forecast the All Share Price Index (ASPI) for the period January to December 2025, yielding an average predicted value of 4.65%. The forecasting accuracy metrics showed a low MAE of 0.1390%, RMSE of 0.2459%, and MAPE of 2.3042%. According to Lewis’s (1982) criteria, a MAPE below 10% indicates high forecasting accuracy. This study highlights the effectiveness of the MIDAS model in integrating mixed-frequency data and its practical value for emerging markets like Sri Lanka. The findings offer valuable insights for investors, financial analysts, and policymakers aiming to enhance decision-making through advanced forecasting techniques. Therefore, they should integrate mixed-frequency forecasting models like MIDAS into monetary and financial decision-making to enhance predictive accuracy, support data-driven policy formulation, improve investor confidence, and promote sustainable economic growth. Wed, 01 Jan 2025 00:00:00 GMT http://drr.vau.ac.lk/handle/123456789/1545 2025-01-01T00:00:00Z http://drr.vau.ac.lk/handle/123456789/1542 The Role of Taxation in Driving GDP Growth in Sri Lanka: An ARDL Bounding Testing Approach Madhushika, S.I.; Jayasinghe, A.K. This study examines the impact of taxation on economic growth in Sri Lanka using annual time series data from 1990 to 2023 within an ARDL Bounds Testing framework. GDP growth is analyzed alongside tax revenue, inflation, money supply, and trade openness to assess short-run and long-run dynamics. Descriptive statistics indicate Sri Lanka’s GDP growth averages 4.30% with moderate variability, while inflation shows high volatility. The ADF unit root tests confirm a mixed order of integration, validating ARDL applicability. The bounds test confirms a stable long-run equilibrium relationship among variables. In the long run, tax revenue significantly and positively impacts GDP growth, suggesting higher tax revenue supports growth through productive public investment. Inflation and money supply lagged exhibit significant negative effects, indicating that price instability and excessive monetary expansion harm growth. Trade openness displays a weak but positive influence. Short-run analysis reveals that changes in money supply and trade openness significantly affect GDP growth, with the error correction term indicating that 95% of disequilibrium adjusts within one year, confirming rapid convergence to the long-run path. Diagnostic tests confirm model reliability, with no evidence of heteroscedasticity, serial correlation, or significant non-normality in residuals. CUSUM and CUSUMSQ tests further validate structural stability. The findings highlight the role of tax revenue in driving Sri Lanka’s GDP growth while emphasizing the need for effective monetary policy to control inflation and manage money supply. The study recommends reforming the tax system to focus on growth-friendly instruments, strengthening tax administration, ensuring price stability, and promoting trade openness to support sustainable economic growth in Sri Lanka. Wed, 01 Jan 2025 00:00:00 GMT http://drr.vau.ac.lk/handle/123456789/1542 2025-01-01T00:00:00Z