Determinants of Inflation: Evidence from Pakistan using Autoregressive Distributed Lagged Approach

Authors

  • Niaz Hussain Ghumro Sukkur Institute of Business Administration, Pakistan
  • Pervaiz Ahmed Memon Sukkur Institute of Business Administration

DOI:

https://doi.org/10.30537/sijmb.v2i1.86

Keywords:

Determinants of Inflation, Money Supply, Exchange Rate, Total Reserves ARDL.

Abstract

Controlling inflation is one of the biggest challenges faced by the macroeconomic policymakers in Pakistan. This research article is aimed at highlighting the main sources of inflation in the economy of Pakistan using an autoregressive distributed lag model for the period from 1980 to 2012. Findings of this study reveal that the one percent rise in the long run money supply, exchange rate, total reserve, and the gross national expenditure change inflation by 0.16, 2.12, 0.36, and 1.78 percent points respectively. The Error Correction model with negative sign remains statistically significant with approximate 81% speed of adjustment to restore the equilibrium in the long run, which shows the quick convergence.

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Sukkur IBA Journal of Management and Business - SIJMB Volume 2 No. 1 (January - June, 2015)

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Published

2015-04-04

Issue

Vol. 2 No. 1 (2015): SIJMB Volume 2 No. 1 (January - June, 2015)

Section

Articles

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