Syed Zahid Ali is a Associate Professor at Lahore University of Management Sciences.
When inflation results from excess demand for goods and services, central banks’ typical response is to increase interest rates. The usual transmission mechanism is: a reduction in money supply (tightening monetary policy) increases interest rates, which is expected to reduce overall spending (both consumption and investment) thus leading in an overall demand reduction...
4 Sep 2014 | Syed Zahid Ali, Kashif Zaheer Malik, Syed Muhammad Hussain