Open AccessInvestigation of Energy Inflation Dynamics in Pakistan: Revisiting the Role of Structural Determinants
Author(s) -
Sidra Iqbal,
Fouzia Yasmin,
Noreen Safdar,
Maria Safdar
Publication year - 2021
Publication title -
review of applied management and social sciences
Language(s) - English
Resource type - Journals
eISSN - 2708-3640
pISSN - 2708-2024
DOI - 10.47067/ramss.v4i2.137
Subject(s) - economics , cointegration , unit root , inflation (cosmology) , macroeconomics , monetary economics , unit root test , volatility (finance) , econometrics , structural break , physics , theoretical physics
Enormous fluctuation has been observed in energy prices in recent years. This strong volatility in energy prices implies grave inferences for Pakistan’s economy as shown by its substantial dependence on imported fuels. In Pakistan, energy prices play a critical role in inflation determination also concluded in the study at hand. The index of energy inflation was constructed, and the role of various control variables such as board money, taxes, oil prices, energy import, and GDP has been elaborated. Current study endeavors to examine the determinants of energy inflation in Pakistan by using time-series data for 1991 to 2019. Unit root was tested by utilizing ADF, furthermore, the Bound test suggested ARDL cointegration for empirical analysis. Therefore, an increase in the demand for energy in economic activities in developing countries indicates an energy demand hence implies energy inflation. The government of Pakistan must focus on the role of these factors to control inflation and to enhance the welfare in the country.