Article ID Journal Published Year Pages File Type
973335 The North American Journal of Economics and Finance 2014 16 Pages PDF
Abstract

•The current study investigates the use of investment in gold is a hedge against inflation for the case of Pakistan.•The study has applied the ARDL bounds testing approach to co-integration for the long run, and innovative accounting approach (IAA) to examine the direction of causality in variables.•Findings reveal that “investment in gold is a good hedge against inflation” not only in the long-run but also in the short-run.

The last few years have witnessed overwhelming investments in the gold market. Numerous studies have discussed how investment in gold is a hedge against inflation. The current study investigates whether a gold investment is a hedge against inflation in case of Pakistan. In doing so, we have used time series data on gold prices; economic growth and inflation are used for the period of 1997Q1–2011Q4. The study has applied the ARDL bounds testing approach to co-integration for the long run, and innovative accounting approach (IAA) to examine the direction of causality in variables. Our findings reveal that “investment in gold is a good hedge against inflation” not only in the long-run but also in the short-run. The implications and applications of the study are discussed in detail.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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