Trade Liberalisation, Financial Development and Economic Growth

Muhammad Khan and Abdul Qayyum

No 2007:19, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: This paper empirically investigates the impact of trade and financial liberalisation on economic growth in Pakistan using annual observations over the period 1961-2005. The analysis is based on the bound testing approach of cointegration advanced by Pesaran, et al. (2001). The empirical findings suggest that both trade and financial policies play an important role in enhancing economic growth in Pakistan in the long-run. However, the short-run responses of the real deposit rate and trade policy variables are very low, suggesting further acceleration of the reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated equation remains stable over the period of study as indicated by CUSUM and CUSUMQ stability tests.

Keywords: Trade Liberalisation; Financial Development; Economic Growth; Bound Test (search for similar items in EconPapers)
JEL-codes: C22 F43 G10 O10 (search for similar items in EconPapers)
Pages: 34 pages.
Date: 2007
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-his and nep-int
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Citations: View citations in EconPapers (10)

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https://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper-19.pdf First Version, 2007 (application/pdf)

Related works:
Working Paper: Trade Liberalisation, Financial Development and Economic Growth (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pid:wpaper:2007:19

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