Does a Symmetric Relationship Exist Between Inflation and Imported Inflation? Empirical Evidence from Saudi Arabia


This study aims at examining the nature of the relationship betweeninflation represented by the relative change in the consumer price index andimported inflation represented by the relative change in import prices in SaudiArabia. The study uses data for the period 2000-2017. From an econometricperspective, the nonlinear autoregressive distributed lag (NARDL) is used. Theresults of the unit root tests shows that all the variables have a unit root exceptfor the money supply. It also shows that there is a structural breakpoint ininflation and imported inflation in 2006 Q3 and 2012 Q3, respectively. Theresults shows a direct correlation between imported inflation and generalinflation using ARDL and a 0.3066 elasticity coefficient, also shows anasymmetric relationship using NARDL in the long term and in the short termBetween the two variables.