Stocks as Hedge against Inflation in Pakistan: Evidence from ARDL Approach

Muhammad Shahbaz and Faridul Islam ()

MPRA Paper from University Library of Munich, Germany

Abstract: The paper implements ARDL bounds testing approach to cointegration to explore whether or not stocks are good hedge against inflation in the case of a transition economy such as Pakistan, using annual data for the period 1971 – 2008. Ng-Peron (2001) unit root test is applied to determine the stationarity of the series. The results suggest that stocks act as good hedge against inflation in Pakistan both in the long and the short run. The findings should help formulate appropriate policy to encourage investment in financial markets and thereby promote economic growth.

Keywords: Stock Returns; Inflation; ARDL Bounds Testing; Ng-Perron Test (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Date: 2010-11-19, Revised 2011-03-23
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Journal Article: Stocks as Hedge against Inflation in Pakistan: Evidence from ARDL Approach (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:30970

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