PRICE STABILITY VERSUS ECONOMIC GROWTH - A COMPARATIVE ANALYSIS DURING DIFFERENT REGIMES OF CURRENT GOVERNMENT

Abstract

This research paper is an attempt to do a comparative analysis between price stability and economic growth during different regime of current government. Quantitative & Qualitative analysis of historical data have been done in order to describe overall effect on economic growth due to price volatility. The main principle idea of this study is to retrace the existence of inflation growth relationship in the economy of Pakistan and to analyze the impact of inflation on GDP growth of the economy. It is, further, to investigate whether it encourages or hurts the economic growth in a uniform way or it behaves differently during different regimes of Pakistan People’s Party which is the current government of Pakistan. Annual GDP growth rate an Inflation data for the period 1971- 1977, 1988-1990, 1993-1996 to 2008-Present have been taken and analysis is made by employing the method of Graphical Analysis of historical data and by conducting questionnaire survey of Businessmen, Salaried Individuals, House Wives and Students. A negative and momentous inflation growth relationship has been found to be existed in the economy of Pakistan. The consequences of the study show that prevailing inflation is harmful to the GDP growth of the economy and bad governance plays a vital role in this regard. Questionnaire analysis reveals that majority of the respondents vote for 6%- 10% rate of Inflation for Pakistan’s economy and by exceeding that limit, Inflation will start effecting economic growth negatively. On the basis of the descriptive and historical data analysis, we may suggest to the policy makers and the State Bank of Pakistan to lock up the inflation to a certain threshold level and to keep it stable. So that it may exert its positive effects on economic growth of the country.