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‡ Rising Inflation Rates,


‡ Unemployment and
‡ Poverty
are the major challenges facing Pakistan
in establishing sustainable long-term growth of
the national economy.

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‡ In Pakistan, it has squeezed the major part of the


population in Terms Of consumption.

‡ Specially, During Current fiscal Year (2009-10) both


Inflation And Unemployment Rose To Very High level,
CPI goes above 30%, creating an alarming situation
for the consumers and producers.
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÷ain objectives are as follows;

‡ To Analyze Relationship Between Price Instability


And economic growth in Pakistan·
‡ To understand Relationship Between Price
Instability And unemployment in Pakistan·
‡ How price instability have an effect on
unemployment and economic growth?
So What is this all About«««..

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ëross Domestic Product , The total market value of all final


goods and services produced in a country in a given year,
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ï   explains
‡ The negative relationship between inflation and
unemployment.
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‡ When we try to control inflation , the unemployment increases
and when we try to control unemployment the inflation rises.
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‡ ÷ain findings of these studies are that there is negative relationship


between economic growth and unemployment.

‡ According to Pakistan Institute of Development Economics (PIDE)


Report (2004) Demonstrates that In Pakistan Unemployment Is
increasing gradually.
6 0992 estimates

‡ The Relationship Between economic growth with ëDP


and employment in 10 developed countries.

‡ Economic growth has direct effect on employment, when


economy grows, Employment increases and improves
the Standard of living.

‡ When employment increases or decreases there is direct


effect on economic growth
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‡ Barro (1995) Has Examined The Relationship Between economic


growth and inflation. Ha has observed 5 years average data of 100
countries during the period from 1960-1990.

:
:Result showing
that increase in inflation by 10 percentage point per year
slow the growth of per capita ëDP by 2 to 3 percentage points
per year.
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‡ According to Peter Rousseau and Wachtel (2002) that there is negative


long term relationship between inflation and economic growth.
‡ Sample from 84 countries.
‡ Period of analysis (1960 to 1995)

‡ Vaibhav, Dholakia And Kumar (2008) on the basis of their research said
lower rate of inflation relationship is positive but high rate of inflation
describes negative effect on economic growth
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h6 (2004)
Research shows that inflation has positive effect
on economic growth if the rate of inflation becomes
low up to 2% after that the effect becomes negative.
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‡ Huybens and Smith (1998-99) has analyzed that increase in the


rate of inflation can slow down economic growth by interfering
with the ability of the financial sector to allocate

‡ Bruno and easterly (1998) has described negative relationship


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According to Pakistan Institute of Development Economics


(PIDE) Report (2004) Demonstrates

‡ That In Pakistan Unemployment Is increasing gradually.


‡ Last 20 years employment rate stayed on 1.14 percent.
‡ Unemployment in young population whose age¶s ranges from 10 to
14 years is 8.95 percent During 2007-08.
‡ The Rate Of unemployment Between The Ages Of 15 To 19 years
is 8.72 percent.
‡ 6.84 percent of total population between the ages of 20
to 24 years are living jobless in Pakistan.
($% %$
' %) 

($% %$' %)  -% 099;4 92demonstrates that


unemployment rate distribution based on the education are as follows,

‡ Under ÷atriculate Boys unemployment Is 37.0%,


‡ While between girls the rate of unemployment is 16.7 percent.
‡ 5.5 % boys and 4.7% girls having a degree of HSSC are unemployed.
‡ The boys And ëirls Having ëraduation Degree are Unemployed
respectively 5.2 and 4.1 percent
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‡ In this time period, inflation rate in Pakistan was in double


digits as given in table 2.1.
‡ Due to double digit inflation in country, economic growth was
slow down and
‡ The supply of products was not fulfilling the demands in
the economy
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REFERENCE6-

‡William Seyfried (2005) ³Examining the Relationship between Employment and Economic ërowth in the
Ten Largest States´ Southwestern Economic Review

‡Barro, Robert, 1995, ³Inflation and Economic ërowth,´ NBER Working Paper

‡Peter L. Rousseau, Paul Wachtel (2002) ³Inflation Thresholds and the Finance-ërowth Nexus´
Journal of International ÷oney and Finance SSRN-id315967.pdf

‡Vaibhav C., R. H. Dholakia and B. Kumar (2008)³Inter-Relationship between Economic growth, Savings and
Inflation in Asia´

‡Osama D. (2004) ³Does Inflation Harm Economic ërowth in Jordan?


An Econometric Analysis for the Period (1970-2000)´, International Journal of Applied Econometrics and
Quantitative Studies Vol.1-2

‡Huybens, E. and B. D. Smith, (1999) ³Inflation, financial markets and long-run Real activity,
´ Journal of ÷onetary Economics

‡Bruno, ÷. and Easterly, W. (1998) ³Inflation Crisis and Long-Run ërowth,´ J÷E 41, 3-26.

‡PIDE, September 02 2004, ³unemployment in Pakistan during last decade on rise´, Report released
in the dawn newspaper PIDE, Islamabad.
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