Political Instability and Inflation in Pakistan

Safdar Ullah Khan () and Omar Saqib ()
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Safdar Ullah Khan: Bond University, Queensland, Australia.

No 29, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: This study investigates the effects of political instability on inflation in Pakistan. Applying the Generalized Method of Moments and using data from 1951-2007, we examine this link in two different models. The results of the ‘monetary’ model suggest that the effects of monetary determinants are rather marginal and that they depend upon the political environment of Pakistan. The ‘nonmonetary’ model’s findings explicitly establish a positive association between measures of political instability and inflation. This is further confirmed on analyses based on interactive dummies that reveal political instability significantly leading to high (above average) inflation. Length: 24 pages

Keywords: Political instability; inflation; Pakistan (search for similar items in EconPapers)
JEL-codes: E31 E63 (search for similar items in EconPapers)
Date: 2009-06
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Related works:
Journal Article: Political instability and inflation in Pakistan (2011)
Working Paper: Political Instability and Inflation in Pakistan (2009)
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