The Exchange Rate and Consumer Prices in Pakistan: Is Rupee Devaluation In Inflationary?
This paper challenges the popular view that devaluation of the rupee is inflationary. Recent developments in the theoretical literature are reviewed to explain why consumer prices would be unresponsive to exchange rate changes in the short run. Then empirical tests are conducted for Pakistan during the period 1982 to 2001 to examine whether inflation is systematically related to changes in the exchange rate. The empirical analysis finds no association between rupee devaluations and inflation in Pakistan. It appears, therefore, that concerns about the inflationary consequences of rupee devaluation are unsupported by the facts
Volume (Year): 41 (2002)
Issue (Month): 2 ()
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- Ghulam Yasin Soomro, 2000. "A Re-examination of Fertility Transition in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(3), pages 247-261.
- Naushin Mahmood & Durr-E-Nayab, 1998. "Gender Dimensions of Demographic Change in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 705-725.
- SABlHA HASSAN SYED, 1978. "Female Status and Fertility in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 17(4), pages 408-430.
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