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Is Inflation in Pakistan a Monetary Phenomenon?

M. Ali Kemal ()

The Pakistan Development Review, 2006, vol. 45, issue 2, 213-220

Abstract: The paper finds that an increase in money supply over the long-run results in a higher rate of inflation and thus provides support for the quantity theory of money. It establishes that inflation is essentially a monetary phenomenon. However, the money supply does not instantly influence the price levels; the impact of money supply on inflation has a considerable lag of about 9 months. While the study shows that the money supply works through the system in less than a year, it also points out that the system takes rather long to converge to equilibrium if shocks appear in any of the three variables, viz., GDP, money supply, and prices.

Keywords: Growth; Inflation; Money Supply; QTM (search for similar items in EconPapers)
JEL-codes: E51 N15 N31 (search for similar items in EconPapers)
Date: 2006
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Handle: RePEc:pid:journl:v:45:y:2006:i:2:p:213-220