Inflation in Pakistan

Mohsin Khan and Axel Schimmelpfennig
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Axel Schimmelpfennig: Middle East and Central Asia Department of the International Monetary Fund.

The Pakistan Development Review, 2006, vol. 45, issue 2, 185-202

Abstract: This paper examines the factors that explain and help forecast inflation in Pakistan. A simple inflation model is specified that includes standard monetary variables (money supply, credit to the private sector), an activity variable, the interest and the exchange rates, as well as the wheat support price as a supply-side factor. The model is estimated for the period January 1998 to June 2005 on a monthly basis. The results indicate that monetary factors have played a dominant role in recent inflation, affecting inflation with a lag of about one year. Private sector credit growth and broad money growth are also good leading indicators of inflation which can be used to forecast future inflation developments.

Keywords: Inflation; Pakistan (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (73)

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