This study decomposes major price indices in Pakistan int() permanent and transitory comporlerors using the Beveridge and Nelson (1981) methodology. The results show that most of the price variations are permanent with a major portion being deterministic__ The transitory variations in the consumer price index are only slightly greater than those in the wholesale price index_ Therefore, rem-seeking activities at the retail level are Although a similar pattern holds for the opt,' market versus official exchange rates, rent Neeking can be prevalent because the market is thin and operates on a spot basis. The study concludes that a forecasting strategy based on the Beveridge-Netson approach removes the bulk of uncertainty from prices, though risk cannot be avoided

Eatzaz AHMAD, Sheena Naz ALI. (1999) PERMANENT AND TEMPORARY PRICE VARIATIONS: A Decomposition Analysis based on Stochastic Forecasting Models, Pakistan Journal of Applied Economics, Volume-15, Issue-1.
  • Views 213
  • Downloads 0

Article Details