MACROECONOMIC VARIABLES AND RISING FOOD PRICES: EMPIRICAL EVIDENCE FROM PAKISTAN

Abstract

Purpose: This study examines the long and short-run impact of macroeconomic variable on rising food commodities prices. Methodology/Sampling: For this paper mixed method approach is used, quantitative time series data over the period 1991-2013 and autoregressive distributed lag (ARDL) approach to Co-integration, whereas qualitative data is collected from thematic analysis of many past researches in order to determine the most and least critical consequences of food prices skies by using NVIVO 10 software technique “tree map”. Findings: The result shows energy prices and dollar prices have positive beta coefficients and having statistically significant impact on rising food commodities price index Moreover, the error correction model’s coefficient is with negative sign that suggests its expected significant adjustment toward long-term. Whereas the qualitative results identified different variables have different magnitude of relationship with rising food prices in different situation; Exchange rate, energy prices, money supply are the most critical consequences of rising food items prices. Practical Implications: The study therefore recommends that government should develop and integrated efficient and effective energy and monetary policy with long-term future development outline of controlling food inflation.