Abstract
The current study is an effort to empirically assess the effect of various macroeconomic factors
on inflation in Pakistan by utilizing ordinary least squares (OLS) method and Granger
non-causality test in the time-series framework from 1973-Q3 to 2017-Q2. The empirical
results confirm that real GDP, money supply, imports, government expenditure, and lagged
inflation have a positive and considerable influence on inflation while interest rate has an
adverse impact on inflation. Additionally, the findings demonstrate bidirectional causality
between money supply and inflation, while the unidirectional causal relationship is found from
government expenditure and imports to inflation. These results signify that inflation does not
depend solely on monetary growth in Pakistan; however, imports and fiscal policy are also
contributory factors that have a considerable impact on inflation. The study concludes that
central authority would not accomplish the stabilize prices through changing the monetary
policy until and unless the government will not fix the fiscal deficit.
Syed Irshad Hussain, Akhtar Hussain. (2020) An Empirical Analysis in Effect of Macroeconomic Factors on Inflation for Pakistan, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-18, Issue-1.
-
Views
711 -
Downloads
59
Article Details
Volume
Issue
Type
Language
