ISSN: 1998 - 4162

JISR MSSE Journal Contents

Volume 6, Number 1, January 2008

Empirical Study of Relationship between Budget Deficits and Inflation: A Case Study of Pakistan
Riaz H Soomro - EFU Life Assurance, Karachi, Pakistan
Asif Saeed Memon - SZABIST, Karachi, Pakistan

The purpose of this study is to determine the empirical relationship between budget deficits and inflation based on CPI, and to find empirical evidence of sources of inflation in Pakistan, considering data from 1973 to 2006. The main source of data has been the State Bank of Pakistan and the Federal Bureau of Statistics. Univariate analysis along with simple statistical analysis is utilized to determine the time series properties of each variable. Ordinary Least Square (OLS) method is used to analyze the relationship between the variables of Interest. Co-integration and Error Correction Mechanism (ECM) are used to determine the long run and short run relationships respectively..


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