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Whether Fiscal Stance or Monetary Policy is Effective for Economic Growth in Case of South Asian Countries?

Shahid Ali (), Somia Irum and Asghar Ali
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Somia Irum: Applied Economics Research Centre, University of Karachi.
Asghar Ali: Applied Economics Research Centre, University of Karachi.

The Pakistan Development Review, 2008, vol. 47, issue 4, 791-799

Abstract: The relative significance of fiscal and monetary policy has been one of the most unsettled issues in economics. Relevant literature shows that the study of the effectiveness of monetary and fiscal policy is equivalent to the study of the relative efficacy of Keynesian economics and monetarism. This study investigates the relative effectiveness of both types of policies in the context of modern panel data analysis in case of South Asian Countries during the period from 1990 to 2007 to test the Monetarist and Keynesian claims, and to find out that whether the policy instruments have a significant relationship with economic growth. Im, Pesaran, and Shin and Levin, Lin, and Chu tests have been used to investigate the order of integration. For long run and short run relationship we utilis ed the advance Autoregressive Distributed Lag Model ARDL a co-integration (panel) test and ECM (Error Correction Method) respectively.

Keywords: Fiscal Policy; Monetary Policy; Panel Co-integration (search for similar items in EconPapers)
JEL-codes: C33 E52 E62 (search for similar items in EconPapers)
Date: 2008
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