Determinant of Inflation in Pakistan: An Econometric Analysis, Using Johansen Co Integration Approach
Farooq Ahmed,
Hasan Raza,
Adnan Hussain and
Irfan Lal ()
MPRA Paper from University Library of Munich, Germany
Abstract:
The main object behind the study is to explore the long run and short run dynamics of inflation in case of Pakistan. For this purpose study used annual data 1971 to 2012. Johansen co integration approach is used to check long run equilibrium while ECM (Error Correction Model) is used to check short run dynamics. The result highlighted GDP, M2, energy crises, import and current government expenditure, output gap and adaptive expectation create inflation while development expenditure negatively corrected with inflation. The study concluded that in Pakistan demand side and supply side inflation persist.
Keywords: Inflation; Long run and Short run (search for similar items in EconPapers)
JEL-codes: C1 E31 (search for similar items in EconPapers)
Date: 2014-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:106870
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