This, in turn, not only delays bringing inflation under control, but also requires a lot of aggregate demand squeeze, and ultimately a lot of economic growth sacrifice has to be paid to reduce inflation – as has been the case time and again in developing countries in particular, including Pakistan –but also ushers in a boom-bust cycle in a frequent way because of only carrying out structural adjustment policies, and not addressing more broad-based economic institutional reforms on the aggregate supply-side, including seeing a limited role of government in regulating, creating markets, and better running the organization (underlying the economic institutions).

In a developing country, therefore, it does not make sense to follow a rule- based regime, given the significant role of aggregate supply-side determinants, and also the meaningful role of exogenous shocks – like oil price shocks internationally – not to mention the fast-rising role of climate change related shocks both domestically – as being seen in the agriculture, and the service industry, especially the tourism-related........

© Business Recorder