Determinants of Inflation in Pakistan: Demand and Supply Side Analysis

Research Article

In order to achieve the objective, time series data is collected over a period of 1972 to 2014. Auto-regressive and distributed lag model is utilized for long run and short run results. The demand side factors of inflation are population, roads and government expenditure while supply side factors are imports, government revenue, electricity generation and external debt. In the long run, inflation is caused by roads, government expenditure, imports, government revenue and external debt. There is decline in price level due to foreign direct investment, electricity generation and population in long run.

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