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

A revised 1 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 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.