Article | Open Access | Published: 4 January 2022
Not All Commodity Price Shocks are Alike for the Macro Economy of Pakistan
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Abstract:
This study examines the impact of commodity price shocks on the macroeconomic variables of the Pakistan economy by disaggregating commodity price indices into seven different groups, namely food, clothing and footwear, housing, energy, transport, education, health, and others. It uses monthly data from July 2008 to June 2020 and employs the SVAR model for data analysis. The results of our study provide insight that all commodity price shocks are not alike for the macroeconomy of Pakistan, and different commodity price groups affect the economy differently with different magnitude. We note that energy price shock has a dominant positive impact on the interest rate, food price shock on inflation, and health price shock on the exchange rate. Whereas education price shock has a dominant-negative impact on output. The findings of our study may help policymakers control the prices of commodities that are more harmful to the macroeconomy of Pakistan and allow the one that generates a positive impact.
Keywords:
Commodity Price shocks, Inflation, Output, Exchange rate, Interest rate
Publisher:
ILMA UNIVERSITY
Published:
4 January 2022
Issue:
Issue 2 : Volume 17
E-ISSN:
2409-6520
P-ISSN:
2414-8393
DOI:
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This is an open access article distributed under the terms of the Creative Commons Attribution CC BY 4.0 license, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.