Abstract:
Inflation affects
distribution of
income
both
and
wealth. Nominal incomes of some individuals tend to increase with
others remain constant
inflation, while those of
change in the distribution of
thus causing a
income in favour of
group. During early 1970s, it was realized
the
former
the complex
that
and
multidimensional problem of inflation needs a systematic and
scientific understanding, examination,
investigation and
analysis. This study was undertaken to analyze
process
in Pakistan with reference
monetarist,
structuralist
and
the inflationary
agriculture
to
combined
and
sector.
agricultural
bottleneck models were used in the analysis of data. A
27 variables were used
for
Pure
the analysis. In all
total of
the models,
annual growth rate in wholesale price index, consumer price index
and implicit GNP deflator were considered as dependent variables
and regressed with different combinations of variables to examine
the effectiveness of
these variables on inflation.
In monetarist model,
Supply),
V10
(Annual
V5
(Annual
Growth Rate
year
In
lag)
were
found
to
increase
structuralist model,
[International + Inter-wing)
the
V17
one
in Consumer Price Index
inflation rate.
(Imports
as per cent of
vii
in Money
in Wholesale Price Index
year lag), and Vll (Annual Growth Rate
one
Growth Rate
GNP),
+
V19
Exports
(Extent
of
'HP
the Non-Con in odity
for
Incremental Growth in GDP Accounts
Producing Sectors), V24 {Indirect Tax Revenues as per cent of
and V 2 5
were
Taxes in Total Taxes)
(Share o£ Indirect
variables mostly found causing inflation, whereas, V27
Remittances as per cent of GNP)
seemed
the
to decrease
GNP)
the
( Hone
level of
inflation.
that V18
While combining the above two models, it was found
and V23 (Divergence between
(Annual Growth Rate in Import Prices)
Inflation
Food
inflation,
Prices
while
enhanced
Index),
Price
Remittances as per
(Home
V27
declined
significantly
Overall
and
inflation
the
as
home
cent
of
the
GNP)
remittances
increased.
The study depicted
V22 (extent of
excess
that
the variable on agriculture sector
Demand for Food) did not significantly
increase inflation. However, it was found that
not
support
inflation in
the
the variable does
structuralist model,
while
in
combined model it does.
Results
indicated
that
less
than half
of
the
inflation
1
1
experienced by Pakistan over the period 1939-60 to 1979-80 could il
be ii
attributed
to in terna t iona 1
domestic policy action
greater
factors
to reduce
and
the
rate
thus
of
the
scope
for
inflation was
than what was thought to have been the case until now.
Further
studies
in
the
areas
of
domestic
supply
of
agriculture commodities, imports and exports of agricultural
output
were suggested in Pakistan to determine the actual
inflationary movements and pertinent policy implications,