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Intrinsic Inflation Persistence in a Developing Country

Author

Listed:
  • Muhammad Nadim Hanif

    ()

  • Muhammad Jahanzeb Malik

    () (State Bank of Pakistan)

  • Javed Iqbal

    () (State Bank of Pakistan)

Abstract

Persistence in inflation is important because it dictates the costs associated with monetary policy actions. We conduct a detailed analysis of the degree of intrinsic inflation persistence in Pakistan using aggregate price index, group level price indices, and individual commodity prices. Barring the case of food basket, inflation is found to be (significantly) persistent in Pakistan. As against the overall inflation, the degree of persistence is found to be very high for core inflation. These results are robust to structural shocks consideration and hold at aggregate as well as at commodity level analyses.

Suggested Citation

  • Muhammad Nadim Hanif & Muhammad Jahanzeb Malik & Javed Iqbal, 2016. "Intrinsic Inflation Persistence in a Developing Country," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 12, pages 19-42.
  • Handle: RePEc:sbp:journl:71
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    References listed on IDEAS

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    Cited by:

    1. Hanif, Muhammad Nadim, 2014. "Monetary Policy Experience of Pakistan," MPRA Paper 60855, University Library of Munich, Germany.
    2. Tianfeng Li & June Wei, 2015. "Multiple Structural Breaks and Inflation Persistence: Evidence from China," Asian Economic Journal, East Asian Economic Association, vol. 29(1), pages 1-20, March.
    3. Hanif, Muhammad Nadim, 2012. "A Note on Food Inflation in Pakistan," MPRA Paper 45009, University Library of Munich, Germany, revised 11 Mar 2013.
    4. Aadil Nakhoda, 2014. "The Influence of Industry Financial Composition on the Exports from Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 10, pages 21-49.

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    More about this item

    Keywords

    Persistence; Inflation; Food Inflation; Core Inflation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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