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

Niaz Hussain Ghumro () and Pervaiz Ahmed Memon ()
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Niaz Hussain Ghumro: Sukkur Institute of Business Administration, Postal: Airport Road Sukkur-65200, Sindh Pakistan, http://www.iba-suk.edu.pk
Pervaiz Ahmed Memon: Sukkur Institute of Business Administration, Postal: Airport Road Sukkur-65200, Sindh Pakistan, http://www.iba-suk.edu.pk

Sukkur IBA Journal of Management and Business, 2015, vol. 2, issue 1, 17-30

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.

Keywords: Determinants; Inflation; Money; Supply; Exchange; Rate; Total; Reserves; ARDL (search for similar items in EconPapers)
JEL-codes: P23 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ibajmb:0009

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