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ccccccccccccccccccccccccccccccccccccccc³The Determinants of Inflation in Pakistan´

Supervisor
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Senior Professor of Economics
By
M.SHAHZAD YOUSAF
Roll #. ME 8241
MSc Economics
Session: 2007-09
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Department of Economic
Superior University Lahore, Pakistan.
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Dedicated to
My parents, teachers, friends and those who inspired me and whom I will

inspire.

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èertificate

It is certified that the research work contained in this thesis entitled

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supervision by 
 and is approved for submission in the partial

fulfillment of the requirement for the degree of master in business and

economics.c

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c c  , roll # 8241, student of M.Sc. Economics, session;2007-

2009, hereby declare that matter printed in the thesis entitled   c

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published nor it would be in Pakistan or abroad. I also declare that this thesis

work has not been used for any benefit or advantage elsewhere.

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Aè OWLEDGEMETS

First of all I acknowledge my 


!"# c" whose blessings lead me towards

successes accomplishing in every sphere of life. I would like to thank Sir Habib Asghar,

my thesis supervisor for his guidance and support during the entire period of writing this

paper. He constantly monitored my progress toward the completion of this paper. Sir

Habib Asghar, thank you very much.

I also would like to acknowledge Sir Zia who is the program manager for being a source

of encouragement and motivation. He was always welcome and helpful whenever I visited

him for advice.

Finally, I appreciate my family for their understanding during the rest of the time I wasn¶t

available for them. To " all glory is unto Him for seeing me through out many

challenges.

December ,2009

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èhapter no. Description Page no.

’c Abstract««««««««««««««««««« 2

1 Introduction««««««««««««««««««««. 3

’c Introduction«««««««««««««««««. 3

’c Definition«««««««««««««««««....c 4

’c èauses of inflation in Pakistan««««««««««. 5

’c Purpose of the study««««««««««««««. 5

’c Research Question««««««««««««««« 6

2 Literature Review««««««««««««««««««« 7

3 Theoretical Framework««««««««««««««««.. 16

’c Demand Pull Theory««««««««««««««« 17

’c èost Push Inflation«««««««««««««««. 18

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’c Theoretical Framework«««««««««««««« 19

4 Data & Methodology«««««««««««««««««« 20

’c Methodology«««««««««««««««««« 22

’c Simple èo Integration Analysis««««««««««« 25

’c èorrelation««««««««««««««««««.. 25
c Adjusted R2««««««««««««««««««««««««««...
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26
’c èo-integration Test«««««««««««««««.. 27
’c Multi co integration Analysis«««««««««««.. 33
’c Error èorrection Model (EèM)««««««««««..
34

5 Data Analysis««««««««««««««««««««. 36

’c Unit Root Test ««««««««««««««««.. 37

’c èo-integration««««««««««««««««.. 40

’c Error èorrection Model (EèM) «««««««««. 43


’c Adjusted R-squared«««««««««««««« 44
’c F-Statistics ««««««««««««««««. 46

6 èonclusion «««««««««««««««««««. 47

7 References «««««««««««««««««««««.. 50

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