This paper empirically examines the extent to which monetary discretion induces excess
inflation without offsetting real growth gains in the long and short runs both directly and
indirectly. First, a framework is developed to quantify monetary discretion and the
corresponding behaviors it causes in inflation and growth. Second, using Pakistan's case,
which is an example of a typical discretionary monetary policy strategy, not only the direct
long and short-term effects of monetary discretion on inflation and real growth but its indirect …