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Economic Growth, Inflation, and Monetary Policy in Pakistan: Preliminary Empirical Estimates

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  • Ahmed M. Khalid

    (Bond University, Gold Coast, Qld., Australia.)

Abstract

There is a growing debate in the emerging market on the choice of an appropriate monetary or exchange rate policy that could lead to a sustainable economic growth. Inflation targeting has become one of these policy alternatives and has recently been implemented in some of the emerging markets in Asia and Latin America. Given the recent remarkable economic performance of the Pakistan, this issue has also been discussed at various policy forums in Pakistan. An important pre-condition for the success of inflation-targeting is to identify the leading indicators of inflation and develop a model to reasonably forecast inflation. This is the main objective of this paper. Besides an overview of the experience, the main focus of the paper is to provide some preliminary empirical estimates for inflation equation and its causal relationship with other macroeconomic variables.

Suggested Citation

  • Ahmed M. Khalid, 2005. "Economic Growth, Inflation, and Monetary Policy in Pakistan: Preliminary Empirical Estimates," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 961-974.
    • Handle: RePEc:pid:journl:v:44:y:2005:i:4:p:961-974
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    References listed on IDEAS

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    1. Amato, Jeffery D. & Gerlach, Stefan, 2002. "Inflation targeting in emerging market and transition economies: Lessons after a decade," European Economic Review, Elsevier, vol. 46(4-5), pages 781-790, May.
    2. Mohamed Ariff & Ahmed M. Khalid, 2005. "Liberalization and Growth in Asia," Books, Edward Elgar Publishing, number 2909, December.
    3. Kenneth N Kuttner, 2004. "A Snapshot of Inflation Targeting in its Adolescence," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Simon Guttmann (ed.),The Future of Inflation Targeting, Reserve Bank of Australia.
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    Cited by:

    1. Rachel R. Cheti & Bahati Ilembo, 2021. "Vector Autoregressive Approach After First Differencing: A Time Series Analysis Of Inflation And Its Determinants In Tanzania," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 6(2), pages 43-56, September.
    2. Rizvi, Syed Kumail Abbas & Naqvi, Bushra, 2008. "Asymmetric Behavior of Inflation Uncertainty and Friedman-Ball Hypothesis: Evidence from Pakistan," MPRA Paper 19488, University Library of Munich, Germany.
    3. Emmanuel Dodzi K. Havi & Patrick Enu, 2014. "The Effect of Fiscal Policy and Monetary Policy on Ghana’s Economic Growth: Which Policy Is More Potent?," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 3(2), pages 61-75.
    4. Syed Kumail Abbas Rizvi & Bushra Naqvi & Sayyid Salman Rizavi, 2012. "What Does Pakistan Have to Join the Inflation Targeters’ Club—a Royal Flush or a Seven-Deuce Offsuit?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(2), pages 35-62, July-Dec.
    5. Saira Tufail & Sadia Batool, 2013. "An Analysis of the Relationship between Inflation and Gold Prices: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(2), pages 1-35, July-Dec.
    6. Muhammad Waqas Chughtai & Muhammad Waqas Malik & Rashid Aftab, 2015. "Impact of Major Economic Variables on Economic Growth of Pakistan," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(2), pages 94-106, April.
    7. Arshi Shahid & Hafiz Khalil Ahmad & Saima Liaqat, 2020. "Inflation, Globalization and Interest Rate Nexus to Curb Price volatility: An Empirical Cross-Country Analysis," Global Economics Review, Humanity Only, vol. 5(1), pages 153-165, March.
    8. Khan, Rana Ejaz Ali & Gill, Abid Rashid, 2007. "Impact of Supply of Money on Food and General Price Indices: A Case of Pakistan," MPRA Paper 16293, University Library of Munich, Germany.
    9. Arvian Triantoro & Muhammad Zaheer Akhtar & Shiraz Khan & Khalid Zaman & Haroon ur Rashid Khan & Abdul Wahab Pathath & Muhamad Amar Mahmad & Kamil Sertoglu, 2023. "Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 34-50, March.
    10. Syed Kumail Abbas Naqvi & Bushra Naqvi, 2010. "Asymmetric Behavior of Inflation Uncertainty and Friedman-Ball Hypothesis: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 1-33, Jul-Dec.
    11. Rizvi, Syed Kumail Abbas & Naqvi, Bushra, 2009. "Inflation Volatility: An Asian Perspective," MPRA Paper 19489, University Library of Munich, Germany.

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