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Determinants of Inflation: Evidence from Pakistan using Autoregressive Distributed Lagged Approach

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Abstract

Controlling inflation is one of the biggest challenges faced by the macroeconomic policymakers in Pakistan. This research article is aimed at highlighting the main sources of inflation in the economy of Pakistan using an autoregressive distributed lag model for the period from 1980 to 2012. Findings of this study reveal that the one percent rise in the long run money supply, exchange rate, total reserve, and the gross national expenditure change inflation by 0.16, 2.12, 0.36, and 1.78 percent points respectively. The Error Correction model with negative sign remains statistically significant with approximate 81% speed of adjustment to restore the equilibrium in the long run, which shows the quick convergence.

Suggested Citation

  • Ghumro, Niaz Hussain & Memon, Pervaiz Ahmed, 2015. "Determinants of Inflation: Evidence from Pakistan using Autoregressive Distributed Lagged Approach," Sukkur IBA Journal of Management and Business, Sukkur IBA University, vol. 2(1), pages 17-30, April.
    • Handle: RePEc:ris:ibajmb:0009
    DOI: 10.30537/sijmb.v2i1.86
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    Cited by:

    1. Arif Khan & Gul Zeb Chaudhary, 2020. "Determinants Of Inflation In Case Of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 9(4), pages 151-161, December.

    More about this item

    Keywords

    Determinants; Inflation; Money; Supply; Exchange; Rate; Total; Reserves; ARDL;
    All these keywords.

    JEL classification:

    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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