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Determinants of Inflation with Special Reference to Wages in Nepal


  • Sushil Ram Mathema

    (Nepal Rastra Bank)


With a view to study whether the wage increases are the most significant sources of cost-push inflation, price equations inclusive of different forms of commonly available money wages along with other relevant variables are estimated across the different regions of the country. Carpenter's wage in Kathmandu and agricultural laborer's wage in Terai were found to be significant wage variables to exert pressure on the movement of the national prices. Granger Bivariate Causality Test done to see the cause and effect relationship between money wages and rate of inflation revealed the unilateral causation effect running from the rate of inflation to masonry wage in Kathmandu and agricultural labor wage in Terai while the reverse course was seen running from the industrial laborer's wage to the rate of inflation.

Suggested Citation

  • Sushil Ram Mathema, 1998. "Determinants of Inflation with Special Reference to Wages in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 10, pages 1-18, April.
  • Handle: RePEc:nrb:journl:v:10:y:1998:p:1-18

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    Cited by:

    1. Shoora B. Paudyal Ph.D., 2014. "Determinants of Inflation in Nepal: An Empirical Assessment," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 26(2), pages 61-82, October.

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