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Causality between Money and Prices:Evidence from Pakistan

Author

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  • Husain, Fazal
  • Mahmood, Tariq

Abstract

This paper re-examines the causal relationship between money and prices in Pakistan using recent data on money and prices and taking care of time series properties. The results of the paper suggest a unidirectional causality running from money to prices. Further, it seems that the monetary expansion has a greater impact on wholesale sale prices compared to CPI.

Suggested Citation

  • Husain, Fazal & Mahmood, Tariq, 1998. "Causality between Money and Prices:Evidence from Pakistan," MPRA Paper 2720, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2720
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    File URL: https://mpra.ub.uni-muenchen.de/2720/1/MPRA_paper_2720.pdf
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    2. Bijan B. Aghevli & Mohsin S. Khan, 1978. "Government Deficits and the Inflationary Process in Developing Countries (Déficits publics et processus inflationniste dans les pays en développement) (Los déficit públicos y el proceso inflaciona," IMF Staff Papers, Palgrave Macmillan, vol. 25(3), pages 383-416, September.
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    Cited by:

    1. Adeela Rustam & Ying Wang, "undated". "The Effectiveness Of Monetary Policy Transformation In Pakistan: Exploring Monetary Neutrality Proposition," Review of Socio - Economic Perspectives 201940, Reviewsep.
    2. Nadia Saleem, 2008. "Measuring Volatility of Inflation in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 13(2), pages 99-128, Jul-Dec.
    3. Sajid Amin Javed & Saud Ahmad Khan & Azad Haider & Farzana Shaheen, 2012. "Inflation and Inflation Uncertainty Nexus: Empirical Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 348-356.
    4. Sadia Tahir, 2006. "Core Inflation Measures for Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 2, pages 319-342.
    5. Khalid Mushtaq & Abdul Ghafoor & Abedullah & Farhan Ahmad, 2011. "Impact of Monetary and Macroeconomic Factors on Wheat Prices in Pakistan: Implications for Food Security," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(1), pages 95-110, Jan-Jun.
    6. Khan, Rana Ejaz Ali & Gill, Abid Rashid, 2007. "Impact of Supply of Money on Food and General Price Indices: A Case of Pakistan," MPRA Paper 16293, University Library of Munich, Germany.
    7. Asma Awan & Hafiz Khalil Ahmad & Altaf Hussain & Muhammad Yousuf Khan Marri, 2021. "Prices, Money Supply and Output Nexus in Pakistan – A Macro Econometric Model," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(2), pages 38-77, September.
    8. Hussain, Karrar, 2009. "Causal Ordering Between Inflation and Productivity of Labor and Capital: An Empirical Approach for Pakistan," MPRA Paper 16486, University Library of Munich, Germany.

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    More about this item

    Keywords

    Money; prices;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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