Determinant of Inflation in Pakistan: An Econometric Analysis, Using Johansen Co Integration Approach.

Ahmed, Farooq and Raza, Hasan and Hussain, Adnan and Lal, Irfan (2014): Determinant of Inflation in Pakistan: An Econometric Analysis, Using Johansen Co Integration Approach. Published in: European Journal of Business and Management , Vol. 5, No. 30

Abstract

The main object behind the study is to explore the long run and short run dynamics of inflation in case of Pakistan. For this purpose study used annual data 1971 to 2012. Johansen co integration approach is used to check long run equilibrium while ECM (Error Correction Model) is used to check short run dynamics. The result highlighted GDP, M2, energy crises, import and current government expenditure, output gap and adaptive expectation create inflation while development expenditure negatively corrected with inflation. The study concluded that in Pakistan demand side and supply side inflation persist.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, Long run and Short run
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation

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