Factors of Inflation in Pakistan Economy: An Empirical Investigation

Abstract

The focus of this study is to explore the leading factors of inflation in Pakistan. The results show that there is a strong infusion of GDP, IMP, Taxes and Government lending. So there is need to adopt some measurement which can result to improve the condition of the economy. Inflation can be controlled through continuous growth in GDP because continuous growth of GDP only controls the inflation. Empirically it is evident that Pakistan’s growth since 1970 is under source that high and persistent. Secondly Government Taxes is an important factor of controlling inflation. So Government should cut-down its unnecessary expenditures like expenditure on foreign tours of ministers etc. Pakistan should also be careful for expenditure on major programs. We should avoid loose policies and efficient people should be on the seats. If this thing happens in Pakistan then as a result the demand for domestic good will also increases and imports will decreases and there will be surplus in the balance of payments and we have more capital to invest.