## Inflation in Pakistan: Money or Wheat?

_IMF Working Papers, March 1, 2006_

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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

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### 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.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-in-pakistan-money-or-wheat-18793_