Economic Growth, Inflation and Monetary Policy in Pakistan: Preliminary Empirical Estimates

In economic policy, construction Inflation is a core variable to be considered that determines the economic activity. To make a suitable monetary policy, it is very essential to check the price level and later on, many other variables are considered to achieve the goal. This study aims to reveal the affiliation of inflation on the growth of economic activities in Pakistan. Time series data set for the period 1989-2020 was used to have the empirical estimates. Augmented Dickey Fuller Unit Root Test is employed to check the unit root of the time series and Auto Regressive Distributive Lag techniques are used for empirical estimates. The present research uses Inflation as a dependent variable and Gross Domestic Product, Interest Rate, Money Supply, and Exchange Rate as the explanatory variables of the study. The findings of this analysis reveal that there's an antagonistic relation between Inflation and GDP.