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INFLATION STRUCTURE AND ITS DETERMINANTS IN PAKISTAN WITH REFERENCE TO AGRICULTURE SECTOR

Panhwar, Iqbal Ahmed (1991) INFLATION STRUCTURE AND ITS DETERMINANTS IN PAKISTAN WITH REFERENCE TO AGRICULTURE SECTOR. PhD thesis, Sindh Agriculture University, Tando Jam.

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Abstract

Inflation affects the distribution of both income and wealth. Nominal incomes of some individuals tend to increase with inflation, while those of others remain constant thus causing a change in the distribution of income in favour of the former group. During early 1970s, it was realized that the complex and multidimensional problem of inflation needs a systematic and scientific understanding, examination, investigation and analysis. This study was undertaken to analyze the inflationary process in Pakistan with reference to agriculture sector. Pure monetarist, structuralist and combined and agricultural, bottleneck models were used in the analysis of data. A total of 27 variables were used for the analysis. In all the models, annual growth rate in wholesale price index, consumer price index and implicit GNP deflator were considered as dependent variables and regressed with different combinations of variables to examine the effectiveness of these variables on inflation. In monetarist model, VS (Annual Growth Rate in Money Supply), VIO (Annual Growth Rate in Wholesale Price Index one year lag), and VII (Annual Growth Rate in Consumer Price Index one year lag) were found to increase the inflation rate. In structuralist model, Vl7 (Imports + Exports [International + Inter-wing] as per cent of GNP), Vl9 (Extent of Incremental Growth in GDP Accounts for the Non-Commodity Producing Sectors), V24 (Indirect Tax Revenues as per cent of GNP rand V25 (Share of Indirect Taxes in Total Taxes) were the variables mostly found causing inflation, whereas, V27 (Home Remittances as per cent of GNP) seemed to decrease the level of inflation. While combining the above two models, it was found that Vl8 (Annual Growth Rate in Import Prices) and V23 (Divergence between Inflation Food Prices and Overall Price Index), enhanced the inflation, while V27 (Home Remittances as per cent of GNP) significantly declined the inflation as home remittances increased. The study depicted that the variable on agriculture sector V22 (Extent of Excess Demand for Food) did not significantly increase inflation. However, it was found that the variable does not support inflation in the structuralist model, while in combined model it does. Results indicated that less than half of the inflation experienced by Pakistan over the period 1959-60 to 1979-80 COUlo 1959-60 to 1979-80 could be attributed to international factors and thus the scope for Domestic policy action to reduce the rate of inflation was Greater than what was thought to have been the case until now. Further studies in the areas of domestic supply of agriculture Commodities, imports and exports of agricultural output were suggested in Pakistan to determine the act inflationary movements and pertinent policy implications.

Item Type:Thesis (PhD)
Uncontrolled Keywords:Price level, Inflation, Excess aggregate, Money, Agriculture, Federal Deficit, Remittances, Revenues, Structural Imbalance, Monetary, Agricultural bottleneck, Wholesale price index, Consumer price index, Implicit GNP deflator, GNP, GDP, Revenues, Agriculture commodities
Subjects:Social Sciences(g) > Economics (g5)
ID Code:570
Deposited By:Mr. Muhammad Asif
Deposited On:24 Aug 2006
Last Modified:04 Oct 2007 21:01

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