Effect of terrorist attacks on inflation in Pakistan: An ARDL Co-Integration Analysis

Abstract

The recent study try to examine that how much terrorist attacks has effected on the inflation of the Pakistan. The Auto Regressive Distributive Lag Model (ARDL) Analysis has been conducted to find results of the study for the period 1972-2017 that show in the short run, terrorist attacks is statistically significant and has positive effect on the economy of the country. Which means inflation will be increased due to increase in the terrorist attacks that will generate the adverse effect on the economy and it will also become the cause of slow pace in the development of the country. But the in the long run results, terrorist attacks has no effect on the inflation because its findings are insignificant. Government must take immediate steps to control terrorist attacks to save the economy and achieve the required level of the inflation in the Pakistan. Moreover, government should increase the employment opportunities in which people of the country could fulfill their basic requirements of life easily and completely.