Abstract :
Continued inflation and relative price variability could have negative impacts on both groups of producers and consumers. Examination of the relationship between relative price variability and inflation plays a vital role in setting appropriate economic policies. To study the causal relationship between agriculture relative price variability and inflation during 1369-1387, Granger causality test was used. Also the existence of long-run relationship between variables was examined using Johansen Cointegration test and vector error correction model. Results indicated that there was bilateral positive relation between inflation and agriculture relative price variability in the short–run, but in the long-run there was unidirectional causality from inflation to relative price variability.
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