An Empirical Nexus between Consumer and Wholesale Price Indexes for Pakistan

Abstract

This paper examines the relationship between consumer and wholesale price indexes for Pakistan using the Granger Causality Test Procedure developed by Toda-Yamamoto (1995) after the analysis of unit root and cointegration tests, the most widely used tests for time series analysis. The findings in this paper indicate that there is a bidirectional causal relationship between consumer and wholesale price indexes at bivariate and multivariate, with additional variables money supply and exchange rate. The results of this study apparently seem consistent with preceding studies that wholesale prices and consumer prices have feedback effect among them