Effect of inflation on the growth and development of the Pakistan economy: An empirical analysis

Tom Jacob, Raphael Rincy and V.S. Ajina
Additional contact information
Tom Jacob: Christ College, Irinjalakuda, Kerala, India
Raphael Rincy: Sri Ramakrishna Engineering College, Coimbatore, Tamil Nadu, India
V.S. Ajina: Christ College, Irinjalakuda, Kerala, India

Theoretical and Applied Economics, 2023, vol. XXX, issue 2(635), Summer, 239-250

Abstract: High and sustained economic growth with low inflation is the central objective of the macroeconomic policy makers. Therefore, inflation has been one of the most researched topics in macroeconomics for the last many years because it has serious implications for GDP growth and performance. The main aim of this empirical study to examined the relationship between inflation and Gross Domestic Product performance in Pakistan by using time series data from 2000 to 2022. The major purpose of this study is to examine the existence of inflation- growth relationship in the economy of Pakistan and to analyse the impact of inflation on GDP growth of the economy. Augmented Dickey Fuller Unit Root Test is employed to check the unit root of the time series and Auto Regressive Distributive Lag (ARDL) technique is used to estimate the long run and short run impact of inflation in the economic growth of Pakistan. The present study uses Inflation as an independent variable and Gross Domestic Product is the dependent variable. The ultimate purpose of the study is find out long-term and short term relationships between these variables and investigate the effect of Inflation over Pakistan economic growth. A negative and significant inflation growth relationship has been found to be existed in the economy of Pakistan. The results of the study show that prevailing inflation is harmful to the GDP growth of the economy after a certain threshold level. On the basis of the descriptive and econometric analysis, this research study suggest to the policy makers and the State Bank of Pakistan to restrict the inflation in minimum level and to keep it stable. So that it may exert its positive effects on economic growth of the economy. Pakistan must need inflation but in single digit of inflation stimulate the economic growth.

Keywords: CPI; GDP; AIC; ARDL. (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://store.ectap.ro/articole/1673.pdf (application/pdf)
http://www.ectap.ro/articol.php?id=1673&rid=151 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:2(635):y:2023:i:2(635):p:239-250

Access Statistics for this article

Theoretical and Applied Economics is currently edited by Mircea Dinu

More articles in Theoretical and Applied Economics from Asociatia Generala a Economistilor din Romania / Editura Economica Contact information at EDIRC.
Bibliographic data for series maintained by Mircea Dinu ().