Open AccessImpact of Exchange Rate and Oil Prices on Inflation in Pakistan
Author(s) -
Tahira Bano Qasim,
Hina Ali,
Alina Baig,
Maria Shams Khakwani
Publication year - 2021
Publication title -
review of economics and development studies
Language(s) - English
Resource type - Journals
eISSN - 2519-9706
pISSN - 2519-9692
DOI - 10.47067/reads.v7i2.349
Subject(s) - cointegration , unit root , exchange rate , economics , inflation (cosmology) , econometrics , order of integration (calculus) , series (stratigraphy) , inflation rate , oil price , augmented dickey–fuller test , time series , unit root test , monetary economics , statistics , mathematics , interest rate , geology , mathematical analysis , paleontology , physics , theoretical physics
This study investigates the impact of Exchange Rate (Rupees Vs US $) and oil prices (Pak. Petroleum) and on the inflation rate in Pakistan by applying the Co-Integration technique to the monthly data for all the three series ranging from January 2004 to January 2019. Unit root testing results provide strong statistical evidence for each of the series to be non-stationary at the level and stationary at first difference. Co-integration testing results confirm the existence of Cointegration among the selected time series. Moreover, the empirical results of the regression of inflation on the exchange rate and oil price also lead to conclude that both the series have a strong statistical significant impact on inflation in Pakistan.