Causality between Money and Prices:Evidence from Pakistan

This paper re-examines the causal relationship between money and prices in Pakistan using recent data on money and prices and taking care of time series properties. The results of the paper suggest a unidirectional causality running from money to prices. Further, it seems that the monetary expansion has a greater impact on wholesale sale prices compared to CPI.Money; prices

Causality between Money and Prices: Evidence from Pakistan

The relationship between money and prices has been a debated issue among economic schools of thought particularly between the Monetarists and the Keynesians. The monetarists claim that changes in money stocks cause changes in price levels. In other words, the direction of causation runs from money to prices implying that prices can be controlled through money supply. The keynesians, on the other hand, argue that money is important but is not responsible for changes in price levels. Instead, structural factors play important role suggesting that money supply is not an effective instrument to control price changes. The causal relationship between money and prices has been extensively tested in various countries. For example, Brillembourg and Khan (1979) examined this relationship in USA. Using Sims procedure for the period 1870–1975, they found unidirectional causality running from money to prices. Similar directions of causation are reported by Lee and Li (1983) and Ramachandran and Kamaiah (1992) who investigated the causal relationship in Singapore and India respectively. On the other hand, Aghevli and Khan (1978), while investigating the causal relationship in Brazil, Columbia, the Dominican Republic, and Thailand, found bidirectional causality between money and prices in these countries.

The Stock Market and the Economy in Pakistan

This paper re-examines the causal relationship between stock prices and macro variables like consumption expenditure, investment spending, and economic activity (measured by GDP) in Pakistan. Using annual data from 1959-60 to 1998-99 and applying cointegration and error correction analysis, the paper indicates the presence of long-run relationship between stock prices and macro variables. Regarding the cause and effect relationship, the analysis indicates a one-way causation from macro variables to stock prices, implying that in Pakistan fluctuations in macro variables cause changes in stock prices. The findings suggest that the stock market in Pakistan is not that developed to play its due role in influencing aggregate demand. A disturbing feature of the stock market in Pakistan is that it cannot be characterised as the leading indicator of economic ctivity. In the absence of other strong indicators,shooting up of stock prices may indicate a speculative bubble.Financial market; Pakistan

WTO Regulations and the Audio-visual Sector—An Analytical Framework for Pakistan

Audio-visual services play a crucial and formative role in any society. These services are closely linked to the preservation of cultural identity and social values, and play a major role in shaping public opinion, safeguarding democratic system and developing creative potential. Due to these reasons, governments of both developed and developing countries not only provide direct and indirect incentives to their domestic industries but also strictly regulate the content of audio-visual media. During the Uruguay Round of WTO (World Trade Organisation) negotiations, audio-visual service sector witnessed limited liberalisation. Even major players such as the EU, Australia and Canada did not make any commitments to liberalise trade in these services. This was primarily to protect the domestic industries from foreign competition, promote their growth and to protect the cultural heritage of the nations from foreign influence. Many countries have repeatedly raised concerns about the capability of the GATS (General Agreement on Trade in Services) framework to take into account the democratic, cultural and social aspects. Others have explained that audio-visual sector is largely covered by domestic regulations and normal trade rules are not applicable to these services.

The Stock Market and the Economy in Pakistan

This paper re-examines the causal relationship between stock prices and macro variables like consumption expenditure, investment spending, and economic activity (measured by GDP) in Pakistan. Using annual data from 1959-60 to 1998-99 and applying cointegration and error correction analysis, the paper indicates the presence of long-run relationship between stock prices and macro variables. Regarding the cause and effect relationship, the analysis indicates a one-way causation from macro variables to stock prices, implying that in Pakistan fluctuations in macro variables cause changes in stock prices. The findings suggest that the stock market in Pakistan is not that developed to play its due role in influencing aggregate demand. A disturbing feature of the stock market in Pakistan is that it cannot be characterised as the leading indicator of economic activity. In the absence of other strong indicators, shooting up of stock prices may indicate a speculative bubble.

The Stock Market and the Economy in Pakistan

This paper re-examines the causal relationship between stock prices and macro variables like consumption expenditure, investment spending, and economic activity (measured by GDP) in Pakistan. Using annual data from 1959-60 to 1998-99 and applying cointegration and error correction analysis, the paper indicates the presence of long-run relationship between stock prices and macro variables. Regarding the cause and effect relationship, the analysis indicates a one-way causation from macro variables to stock prices, implying that in Pakistan fluctuations in macro variables cause changes in stock prices. The findings suggest that the stock market in Pakistan is not that developed to play its due role in influencing aggregate demand. A disturbing feature of the stock market in Pakistan is that it cannot be characterised as the leading indicator of economic activity. In the absence of other strong indicators, shooting up of stock prices may indicate a speculative bubble. I. INTRODUCTION The stock market plays an important role in the economy by mobilising domestic resources and channelling them to productive investment. This implies that it must have a significant relationship with the economy. The relationship can be seen, in general, in two ways. The first relationship views the stock market as the leading indicator of the economic activity in the country, whereas the second focuses on the possible impact the stock market may have on aggregate demand, particularly through aggregate consumption and investment. In other words, whether changes in stock market cause fluctuations in macroeconomic variables, like Consumption Expenditures, Investment Spending, Gross Domestic Product (GDP), Index of Industrial Production (IIP), etc., or are caused by these variables is an interesting issue to be examined. The former case implies that stock market leads economic activity, whereas the latter suggests that it lags economic activity. The knowledge of the relationship between stock prices and macro variables is now becoming more important in the case of developing countries in view of the various economic reforms taking place there. From the beginning of the 1990s, a number of Fazal Husain and Tariq Mahmood are Senior Research Economist and Research Economist, respectively, at the Pakistan Institute of Development Economics, Islamabad. Authors’ Note: We are grateful to Dr Abdul Qayyum, Dr A. R. Kemal, and Dr Faiz Bilquees for their valuable comments and suggestions on an earlier draft of the paper.Stock Market; Economy; Pakistan; Linkages; Causality

Causality Between Money and Prices: Evidence from Pakistan

The objective of the paper is to re-examine the causal relationship between money and prices in Pakistan using recent data and employing cointegration and error correction models. Two measures of prices (CPI and WPI) and three measures of money stocks (M0, M1, and M2) were taken for the period July 1981 to June 1998. The analysis indicates a long run relationship between prices and M2 definition of money. The other definitions of money do not seem to be related with prices. The analysis further suggests a unidirectional causality running from money to prices and thus supporting the monetarists’s claim regarding the role of money. The results, however, are different from the findings of earlier studies in Pakistan which generally report bidirectionl causality between prices and money.Money; Prices; Pakistan; Causality; Long Run Relation

Monetary Expansion and Stock Returns in Pakistan

The objective of the paper is to examine the causal relationship between money supply and stock prices in Pakistan. Two measures of money stocks (M1 and M2) and six stock price indices (general and five sectors) were taken for the period June 1991 to June 1999. The co-integration analysis indicates a long run relationship between stock prices and money supply for both M1 and M2. The Error Correction Model, on the other hand, does not endorse the long run relationship between stock prices and M1. Regarding long run relationship between stock prices and M2, the model suggests a unidirectional causality running from M2 to stock prices. The model also shows the evidence of short run effects of M2 on stock prices. The analysis suggests that the stock market is not efficient with respect to money supply.: Money; Stock Prices; Pakistan; Long Run Relationship; Market Efficiency

Three dimensional analogue modelling of extensional fault systems and their applications to the Barrow-Dampier sub-basin, Western Australia

2 v. : ill. (chiefly col.), maps (chiefly col.).Copies of author's previously published articles inserted.v. 1. Text -- v.2. Atlas 3D analogue modelling of extensional fault systems plus field applications. This thesis initiates the concepts to predict compressive zones developed during extension that might influence fluid migration pathways. Computerised Tomography Scanning of the models determine extact zones of extension and compression and their possible control on fluid flow patterns. The main areas chosen to model field examples are from the North West Shelf, Western Australia. Sandbox models are constructed to simulate extensional structures above simple listric, ramp-flat-ramp and complex detachment morphologies. The modelling style used in this study is that of a fixed footwall with a non-streching plastic film attached to the movingwall of the box which separates the footwall from the hangingwall along the detachment surface.Thesis (Ph.D.) -- University of Adelaide, National Centre for Petroleum Geology and Geophysics, 1997

Effects of Input Composition on Technical Efficiencies of Textile Industries in Pakistan

This paper studies the technical efficiencies of the textile manufacturing industries in Pakistan using 5-digit level industry data. Technical efficiencies are computed by the Data Envelopment Analysis technique assuming constant as well as variable returns to scale. The efficiency scores thus obtained are analysed by the TOBIT regression technique to determine how input composition influences these efficiency scores. It is found that imported raw material and machinery exercises a positive effect, whereas non-industrial costs affect technical efficiencies in a negative way. Electricity does not play its due role in affecting technical efficiencies. JEL Classification: C24, D24, L6, O14 Keywords: Technical Efficiency, Data Envelopment Analysis, TOBIT Analysis, Manufacturing Industrie