...DEFINE INFLATION. EXPLAIN VARIOUS CAUSES FOR INFLATION IN PAKISTAN (a) DEMAND SIDE (b) SUPPLY SIDE INTODUCTION: Moderate inflation is associated with economic growth, while high inflation can signal an overheated economy. As an economy grows, business and consumers spend more money on goods and services. In the growth stage of an economic cycle, demand typically outstrips the supply of goods, and producers can raise their prices. As a result, the rate of inflation increases. If economic growth accelerates very rapidly, demand grows even faster and producers raise prices continually. An upward price spiral, sometimes called “runway inflation” or “hyperinflation”, can result. The inflation syndrome is sometimes described as “too many dollars chasing too few goods:” in other words, as spending outpaces the production of goods and services, the supply of dollars in an economy exceeds the amount needed for financial transactions. The result is that the purchasing power of a dollar declines. In general, when economic growth begins to slow, demand eases and the supply of goods relative to demand. At this point, the rate of inflation usually drops. Such a period of falling is known as disinflation. DEFINITION: True inflation begins when the elasticity of supply of output in response to increase in money supply has fallen to zero or when output is unresponsive to changes in money supply. When there exists a state of full unemployment, the conditions will be clearly inflationary...
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...exchange rate, gross domestic product and inflation using data from 1960-2010 to analyze the results. We have taken the data in percentage form. A great number of empirical studies on the relationships of monetary policy and inflation are available and most of these have analyzed the effectiveness of monetary policy in controlling inflation in Pakistan. In this paper we have presented the effectiveness of monetary policy it’s framework and data estimation through which we reached to the conclusion that monetary shocks do affect real variables like GDP, inflation and exchange rate. Pakistan has been estimated by a number of researchers and it has been recognized that monetary phenomenon are responsible for the high levels of inflation. Keywords: Monetary Policy, Inflation, Exchange rate, Economic Growth, Gross domestic product and Pakistan. Introduction This paper attempts to examine the long-run effects of Monetary Policy on several economic variables such as inflation, economic growth that is gross domestic product and exchange rate in Pakistan. For this purpose, analysis have been employed for the period 1960-2010. As monetary policy actions affect policy variables with a significant gap and with high degree of unpredictability and insecurity, it is key to predict the probable impact and degree of monetary policy actions on the real variables. Usually, policy makers and central banks decide that price stability or low inflation would prompt higher economic growth. Commonly...
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...RESEARCH PROPOSAL TOPIC: Rising inflation in Pakistan: Causes and Remedies SUBMITTED BY: NAILA ERUM NATIONAL DEFENCE UNIVERSITY, ISLAMABAD Rising inflation in Pakistan: Causes and Remedies Introduction Pakistan is currently facing unprecedented high Inflation. High inflation is contributing to increase in vulnerability and fall in real income of lower, middle and fixed income segments of the society. It is increasing uncertainty about future scenario of the business environment and instability of the financial system, erosion of business and investors’ confidence, slowing down of real economic activities, investment, economic growth and employment. Inflation is known as a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, there is a decline in the real value of money and purchasing power. Inflation is an indicator of a country’s macro economic stability and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. A numerous supply side and demand side factors could be responsible for this surge in inflation. Inflation can be a result of shocks to the supply of certain food items and to world...
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...Afghanistan and Pakistan are neighbor countries, located in south of Asia. While they have some economic similarities but totally different countries in economic structures and compositions. To illustrate the economic differences Pakistan and Afghanistan following are the main characteristics of these two states: 1. GDP (Gross Domestic Products) is one of the important elements in studying economy of countries. Based on World Bank data, Pakistan GDP was $ 225.1 billion in 2012. In the meanwhile, Afghanistan GDP in 2012 was $ 20.50 billion, which is approximately ten times less than Pakistan. It does make sense because firstly, Pakistan is bigger than Afghanistan in term of population and geography, which population and geography does have effects on its GDP. Secondly, Afghanistan has passed occupation and civil wars that all its infrastructures and revenue sources were demolished. Finally, in terms of GDP composition, Pakistan is better than Afghanistan. The household consumption in Pakistan is 82.5 %, while the household consumption in Afghanistan is 96.5%. 2. Unemployment is another important indicator of economic measurement. In Pakistan the unemployment rate is 6.2%, while the unemployment rate in Afghanistan is 35%, which shows nearly 6 fold higher than Pakistan. Globally, Afghanistan ranks 15 in term of unemployment, while Pakistan locates in 127. In deed the unemployment rate of both countries shows differences in term of sex and rural and urban areas. In Pakistan the unemployment...
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...you to select the research topic. 1 Determinants Of Capital Structure in cement industry of Pakistan 2 Impact of interest rate on stock market 3 A study based on the effects of interest rate (KIBOR) on share price 4 Market Interest rate and commercial bank profitability in Pakistan 5 Determinants of Corporate dividend payout policy 6 Effects of Free Cash flow on profitability of firms 7 Determinant of dividend payout ratio: A study of Pakistani fertilizer sector 8 Fundamentals and stock returns in Pakistan 9 Effects of mergers and acquisition in banking sector of Pakistan 10 Impact of Privatization of banks on profitability 11 Can risk aversion indicators anticipate financial crises? 12 Cash flow and capital spending relationship: evidence from automobile sector 13 Impact of Privatization on profitability and efficiency of banks in Pakistan 14 To study the relationship between price earning ratio and return on investment 15 A test of price earning ratio to predict future growths 16 Factors affect on the dividend payout ratio (sugar industry) 17 Impact of macro-economic variables on stock sector of Pakistan 18 Relationship between Cash flow and investment spending in textile industry 19 Impact of taxation on firm’s dividend payout/ratio 20 Share price volatility explicatedmeasured by fundamentals 21 Stock price and economic variables ( Interest rate, inflation and GDP) 22 Determinants of P/E Ratio 23 Impact of capital structure on profitability 24 Impact...
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...DOES MONETARY POLICY INFLUENCE ECONOMIC GROWTH IN PAKISTAN? Haji Saif Ullah (Author) Email: hajisaif@live.com Muhammad Ashraf (coordinator) Department of Management Sciences University Of Gujrat, Gujrat ABSTRACT This study examines the impact of monetary policy on economic growth in Pakistan. The study uses time-series data covering the range of 1991 to 2011.The effects of stochastic shocks of each of the endogenous variables are explored using Error Correction Model (ECM). The study shows that Long run relationship exists among the variables. Also, the core finding of this study shows that inflation rate, exchange rate and external reserve are significant monetary policy instruments that drive growth in Pakistan. It is therefore recommended that the establishment of primary and secondary government bond markets that can also increase the efficiency of monetary policy and reduce the government’s need to rely on the central bank for direct financing. Keywords: Policy instruments, Economic Growth, GDP, Money supply, monetary policy INTRODUCTION The aim of this study is to examine the impact of monetary policy on economic growth. Economic growth is an important macroeconomic objective for any country. Monetary policy has direct relation with economic growth. Folawewo and Osinubi (2006) stated monetary policy as the arrangements which are planned to control supply of money in a country. In many countries the basic aims of the monetary policy are to stabilize prices...
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...The Relationship Between Exchange Rate and Inflation in Pakistanby Shagufta KashifAbstractThere has been a long-standing interest in studying the factors that are responsible for uneven vacillation in the stable growth of the world economies. Lots and lots of theoretical literature and empirical evidences have addresses this issue in the past. Hike in prices of goods and services and foreign exchange are two important aspects which are deemed responsible for such potholed fluctuations in the economic growthThe volatility of the nature of prices is a major source of concern in all countries since 1970s. The issue is of a more serious nature in the developing countries where inflation in foreign countries known as “imported inflation” is seen to be driving “local/domestic inflation”; making domestic policies to control inflation ineffective. Similarly, in Pakistan, the domestic price level rose from the mid-1970s. The exchange rate started depreciating continuously from the early 1980s. Continuous devaluation of currency and inflation in the 1980s seems to suggest a correlation between the two variables.The studies by Rana and Dowling (1983) suggest that foreign inflation is the most influencing factor in explaining the change in local price level in nine less-developed countries of Asia during the period 1973-79. This study suggests that these countries cannot exercise much control over domestic inflation, however, the policies of their major trading partners (through exchange...
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...EFFECT OF MONETARY POLICY ON THE ECONOMY OF PAKISTAN Submitted To: Sir Ahsan Shakil GROUP MEMBERS: ZIAD ASGHAR B-16703 WALEED BIN AAMIR B- 18992 SAIF UD DIN AHMED B-18993 EFFECT OF MONETARY POLICY ON THE ECONOMY OF PAKISTAN What is Monetary Policy? Monetary policy is how central banks manage the money supply to guide healthy economic growth. This policy is adopted by the central bank of an economy in order to control and regulate the money supply often altering or interest rate to ensure price stability and general trust in the currency. It also deals with the both the lending and borrowing rates of interest of the banks. Objectives of Monetary Policy: 1) Price Stability or Control of Inflation: Monetary policy is better suited to the achievement of price stability that is, containing inflation. Price stability means reasonable rate of inflation. 2) Economic Growth: It is the most important objective of a monetary policy. The monetary policy can influence economic growth by controlling real interest rate and its resultant impact on the investment. 3) Full Employment: Full employment has been ranked among the foremost objectives of monetary policy. It is an important goal not only because unemployment leads to wastage of potential output, but...
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...Semester SOMTU July 18, 2013 ABSTRACT: The rate of inflation- the percentage change in the overall level of prices- varies grately across time and cross country. The objective of this paper is to analyze the consumer price inflation in South Asian Countries from 2002 to 2010. The annual percentage change in CPI and Average Annual Growth Rate in Consumer Price Indices are analyzed to examine the trend of inflation in South Asian Countries like Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan & Sri Lanka. India has average inflation of 5% but Sri Lanka is the hardest hit by the inflation among South Asian countries. Bhutan has very low rate of inflation and Maldives has rising trend of inflation. The inflation rates are co-related with the growth rate of gross domestic product and money supply of South Asian Countries. There is positive co-relation between the rate of inflation and rate of changed in GDP at constant prices in Bangladesh, India, Pakistan, and Sri Lanka but negative correlation in Nepal. There is negative co-relation between rate of inflation and changes in money supply in Bangladesh, Nepal and Pakistan but positive co-relation in Nepal and Sri Lanka. In Pakistan the consumer price inflation is mainly due to oil price hike and food inflation. So the inflation scenario in South Asia is adverse to economic development as it is above 5% in most of the countries. INTRODUCTION: Inflation is a global phenomenon and significant macroeconomic variable...
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...The aim of this report is to empirically analyze the relationship between interest rate, inflation, loan disbursed to textile sector, energy crises and yarn prices with textile sector growth in Pakistan during 2001 to 2011.Dependent variable is Textile sector growth Independent variables are Interest rate,, Inflation, Energy crisis, Price of cotton yarn and Loan disburses to textile sector. The aim of this report is to empirically analyze the relationship between interest rate, inflation, loan disbursed to textile sector, energy crises and yarn prices with textile sector growth in Pakistan during 2001 to 2011.Dependent variable is Textile sector growth Independent variables are Interest rate,, Inflation, Energy crisis, Price of cotton yarn and Loan disburses to textile sector. “Impact of Energy Crisis, Interest Rates and Inflation on Textile Sector of Pakistan” Term Report, Fall 2015 “Impact of Energy Crisis, Interest Rates and Inflation on Textile Sector of Pakistan” Term Report, Fall 2015 Submitted by: Zehra Hasan Zaidi, Sana Shamim,Hamza Nadeem, Abeer Salman Submitted by: Zehra Hasan Zaidi, Sana Shamim,Hamza Nadeem, Abeer Salman LETTER OF TRANSMITTAL 1st December 2015 The Course lecturer Analysis of Pakistani Industries Institute of Business Management Korangi Creek, Karachi. Dear Madam, SUBJECT: TERM REPORT We feel immense pleasure in presenting to your good self, the term report as part of our course requirement. We found this report to be truly challenging...
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...Topic name Impact of inflation on economic growth NAME: ZARGAM ABBAS Registration: MCM 143001 INTRODUCTION: The major purpose of this study is to examine the impect of inflation on economic on economy growth relationship in the economy of pakistan and to analyze the impact of inflation of gdp growth Pakistan; the unemployment was 3.14 percent in the year 1973; it increased to 3.7 percent in the year 1980, then it started declining and became 2.55 percent in the year 1989. After the year 1989; the unemployment started increasing and it reached to its highest level 8.64 percent in the year 2003he inflation rate changed each year and followed both upward and downward trend. It could be seen from the figure no. 2 for a case of Pakistan Objective: The major objective of the present study is to analyze the impact of inflation on gdp growth in pakistan. It is to evaluate the gdp growth performance and to assess the historical trends of the inflation in pakistan To determine and examine the feasible threshold level of inflation for gdp growth It is needed to exploir if the inflation in the time series caused to reduse the growth of the economy or not Literature Review Wajid and kalim (2007) the impact to test unit root problem and in order to find out the long run relationship among unemployment; inflation, economic growth, trade openness and urban population as share of total population the findings of the study sheds light on the impact of urban population as...
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...Analysis of Pakistan’s Industries Electronic Industry of Pakistan Submitted to: Mehwish Ghulam Ali Submitted by Fatima Zafar 06836 Javeria Anees Rangoonwalla 06867 Munazza Arif 06962 Manal Yousuf 04276 Talha Zubairy 07544 Yusra Nasir 06878 Contents Letter of transmittal 3 Executive Summary: 4 Introduction 4 Historical Analysis of Key Variables 5 Inflation 5 Exchange rate 7 Duties and taxes 7 Growth Rate 7 Imports: 8 Current Scenario in the Telecommunication Industry: 8 Fixed Line Sector and Wireless Local Loop (WLL) Sector 9 Current Scenario of Electronic Industry in general 10 Diamond Porter Model: 12 Demand Condition: 13 Related Industries: 13 Conclusion 15 Problems and Hindrances Faced 15 Recommendations 16 Solutions 17 Appendix 1 18 Appendix 2 19 Appendix 3 20 22 Appendix 4 23 Appendix 5 24 Appendix 6 25 Appendix 7 25 Appendix 8 26 Appendix 9 26 Questionnaire 26 Letter of transmittal 10th April, 2016 Ms Mahvish Ghulam Ali Course Instructor Analysis of Pakistan’s Industries IBA, Karachi Dear Ms Ali, It gives us pleasure to present our research report on the Electronic Industry of Pakistan, assign as a compulsory part of the course. This report is based on the analysis of the electronic industry, in relation to the economy, the major players...
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...12 Introduction to Micro And Macro Economics | Major Issues in Pakistan Economy: A Statistical Overview | | | | | Table of Contents Page Historical Background of Pakistan...............................................................................3 An Overview of Current Situation in Pakistan.............................................................5 Major Issues in Pakistan: .............................................................................................7 Illiteracy.............................................................................................................7 Poverty..............................................................................................................12 Corruption.........................................................................................................15 Overpopulation and Population Health.............................................................18 Unemployment..................................................................................................22 Inflation.............................................................................................................26 Energy crisis......................................................................................................30 Political instability............................................................................................33 Conclusion and Recommendations............
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...Islamic Republic of Pakistan was established in 1947, a country of 170 million people, full of natural resources and more than 60 years of independence but still not respected in the world community. Remaining part till today is living on IMF, World Bank and foreign donations. Majority of the population is living in rural areas without basic necessities of life. It is a country where financial gap between rich and poor is widening day by day. From the last 10 years, extremism is increasing. Almost every kind of problem exists in Pakistan, including electricity load-shedding, bad economy, less educational facilities, less hospitals, inflation and no pure water in many parts. These problems exist in Pakistan right from its independence which as mentioned above was more than sixty years ago. Despite it being rich on raw resources thus far Pakistan is a developing country with limited development in every era due to the problems it faces. In the following text we will shed some light on some of the major problems faced today by Pakistan as a country. 1. POVERTY: According to an analysis poverty has increased roughly from 30% to 40% during the past decade. Consider that if 40%of a country’s population is earning their life below the poverty-line in which the people are deprived of basic necessities of life such as clothing, shelter,food, education and medication, such families and their children will be forced to think of their survival only. 2. ILLITERACY Pakistanis...
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...whims, idiosyncrasies of the rulers to achieve certain ulterior motives at the cost of national interests. The hallmark of great nations is that they learn from their past experience to become wiser in conducting their current and future affairs. Another distinctive feature of such nations is that they try to understand the emerging long-term trends to identify new challenges, and plan for the future so as to take maximum advantage of the opportunities and avoid the pitfalls that may lie ahead. On the other hand, the nations on the trajectory of decay and ultimate oblivion neither learn from the past nor have the inclination to look ahead into the future to plan for their security, progress and welfare. All it lacks in the context of Pakistan; socially, economically and politically as well. In the words of Mahbbub-ul-Haq, ‘Crisis in Governance’, “Human Development Report in South Asia”: “Governance is the exercise of political, economic and administrative authority to manage the resources of a country. It is always based upon certain rules and laws established by the members of a society. These laws agreed upon by the society are, in fact, to make governance pro-welfare in the larger interest of the people. The ultimate goal of governance is human development through decreasing human suffering and increasing opportunities.” He further writes: “Good Governance is exercising authority in accordance with the established laws, and...
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