Political instability and inflation in Pakistan

Safdar Ullah Khan*, Omar Farooq Saqib

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

11 Citations (Scopus)

Abstract

This study investigates the effects of political instability on inflation in Pakistan. Applying the Generalized Method of Moments technique and using data from 1951 to 2007, we examine this link through 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 political instability and inflation. This is further confirmed through analysis based on interactive dummies that reveal political instability significantly leading to high (above average) inflation.

Original languageEnglish
Pages (from-to)540-549
Number of pages10
JournalJournal of Asian Economics
Volume22
Issue number6
DOIs
Publication statusPublished - Dec 2011

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