Inflation in Pakistan: Money or Wheat?
IMF Working Papers, March 1, 2006
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- Inflation in Pakistan: Money or Wheat?
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Bibliographic details
- Authors: Mohsin S. Khan, Axel Schimmelpfennig
- Published: March 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863208.001
Overview
- Authors: Mohsin S. Khan, Axel Schimmelpfennig
- Publication date: March 1, 2006
- Publication type: IMF Working Papers, Working Paper No. 2006/060, Issue: 060, Volume: 2006
- Pages: 28
- DOI: https://doi.org/10.5089/9781451863208.001
- Stock No: WPIEA2006060
- ISBN: 9781451863208
- ISSN: 1018-5941
- Subjects: Agricultural prices, Consumer price indexes, Inflation, Monetary base, Price incentives
- Keywords: support price, wheat support price, WP
Research question and model
- Examines the relative importance of monetary factors and structuralist supply-side factors for inflation in Pakistan.
- Specifies a stylized inflation model including:
- Standard monetary variables: money supply, credit to the private sector
- Exchange rate
- Wheat support price as a supply-side factor
- Estimation period: January 1998 to June 2005 on a monthly basis
Key findings
- Monetary factors have played a dominant role in recent inflation.
- Monetary factors affect inflation with a lag of about one year.
- Changes in the wheat support price influence inflation in the short run, but not in the long run.
- The wheat support price matters over the medium term only if accommodated by monetary policy.
Implications (implicit from results)
- Controlling monetary expansion is central to managing inflation over the medium and long term in Pakistan.
- Short-run food price policies (wheat support price adjustments) can affect inflation temporarily, but their persistent inflationary impact depends on monetary policy accommodation.
Additional publication notes
- The Working Paper describes research in progress and the views expressed are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
- Access formats and distribution: Download PDF and multiple citation export formats available.
Source: IMF Working Paper "Inflation in Pakistan: Money or Wheat?" by Mohsin S. Khan and Axel Schimmelpfennig, March 1, 2006.