Monetary policy shocks in Pakistan lead to prolonged inflation persistence.
Inflation persistence is a big concern for economies worldwide. This study looked at how inflation in Pakistan is affected by monetary policy shocks. By analyzing data from 2004 to 2019, the researchers found that inflation in Pakistan tends to stay high for a long time after a monetary policy shock. This means that changes in interest rates take longer to fully impact inflation. The study suggests that monetary policy shocks have a significant impact on inflation persistence in Pakistan.