Sensitivity of the Pakistan Economy to Changes in Import Prices and Profits, Taxes or Subsidies

Abstract

A revised 1 1 John McKean under contract to Chemonics supported by the Pakistan Food Security Management Project. and condensed Pakistan input–output (I–O) model is used to trace and quantify the inflationary impacts of changes in ‘primary’ input prices on the domestic processing sectors of the Pakistan economy. The I–O model 2 1 John McKean under contract to Chemonics supported by the Pakistan Food Security Management Project. is applied to estimate impacts of changes of primary input prices on a Laspeyres price index of input costs to domestic Pakistan industry. Cost push in ‘primary’input prices can include: new or increased tax rates, changes in the terms of trade and prices on imported goods, duties which raise import costs, or increases in the mark-up or profit rate in various industries.

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