Impact of Denoised Inflation on Economic Growth of Pakistan

Sehrish Aslam; Muhammad Jawad Asghar  Shah; Javed  Iqbal; Waqas Younis; Muhammad Muzammil  Asghar

doi:10.63056/ACAD.004.03.0405

Authors

Sehrish Aslam MPhil Scholar, Department of Economics, University of Kotli, Azad Jammu and Kashmir Author
Muhammad Jawad Asghar Shah MPhil Scholar, Department of Economics, NCBA & E, Multan Campus, Pakistan Author
Javed Iqbal Joint Director, State Bank of Pakistan Author
Waqas Younis Lecturer, Department of Economics, University of Kotli, Azad Jammu and Kashmir Author
Muhammad Muzammil Asghar Research Scholar, School of Economics, Bahauddin Zakariya University Multan, Pakistan Author

DOI:

https://doi.org/10.63056/ACAD.004.03.0405

Keywords:

Economic Growth, Inflation , Oil Prices, Imports, Exchange Rate, ARDL Model, Pakistan

Abstract

Denoised inflation provides a clearer measure of persistent price trends, offering valuable insights into its true impact on economic growth, which is vital for informed and effective macroeconomic policymaking. Therefore, this study analyzes the effect of denoised inflation on the economic growth of Pakistan using quarterly time series data from 1994 to 2021. For data estimation, the ARDL model and the ADF test are used. The long-run estimates of ARDL show that the variables oil prices, denoised inflation, exchange rate, and government borrowing negatively and significantly influenced the economic growth, while the variable import growth positively and significantly influenced the economic growth of Pakistan. The study concludes that denoised inflation has a significant negative impact on Pakistan’s economic growth. This highlights the importance of addressing persistent inflationary pressures through effective monetary policies and structural reforms aimed at ensuring macroeconomic stability, enhancing investor confidence, and supporting sustainable long-term economic development in the country.