Abstract
Introduction. High and sustained economic growth with low inflation is the central objective of the macroeconomic policy makers. Therefore, inflation has been one of the most researched topics in macroeconomics for the last many years because it has serious implications for GDP growth. The main aim of this empirical study to examined the relationship b/w (GDP) Gross Domestic Product Growth and inflation in Pakistan by using time series data from 1990 to 2015. Methodology. This study apply (ADF) Augmented dickey fuller test for stationary, and then, Engel Granger Co-integration test, for short run and long run association. Results. There is a strong positive and significance relationship between GDP growth and inflation in Pakistan. Which indicate that is a 1unit increase an inflation rate will caused by GDP increased by 0.27 unit.
Highlights
High and sustained economic growth with low inflation is the central objective of the macroeconomic policy makers
Which indicate that is a 1unit increase an inflation rate will caused by gross domestic product (GDP) increased by 0.27 unit
Among others the emphasis given to price stability in conduct of monetary policy is with a view to promoting sustainable economic growth as well as strengthening the purchasing power of the domestic currency [1]
Summary
High and sustained economic growth with low inflation is the central objective of the macroeconomic policy makers. To attain sustainable economic growth coupled with price stability continues to be the central objective of macroeconomic policies for most countries in the world today. Among others the emphasis given to price stability in conduct of monetary policy is with a view to promoting sustainable economic growth as well as strengthening the purchasing power of the domestic currency [1]. Economic growth and the rate of inflation is central subject of macroeconomics policy. Researchers investigate about inflation and economic growth and have arrived come up with different views. It has been a controversial in both theory and empirical findings [2]
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