A Dynamic Macroeconometric Model of Pakistan’s Economy

Muhammad Khan and Musleh-ud Din ()

No 2011:69, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: In this study, an attempt has been made of develop a dynamic macroeconometric model of Pakistan’s economy to examine the behaviour of major macroeconomic variables such as output, consumption, investment, government expenditure, money, interest rates, prices, exports, and imports. The model consists of 21 equations, of which 13 are behavioural and the rest are identities. The Engle-Granger two-step cointegration procedure is used to derive the long-run and short -run elasticities for the period 1972-2009. The test of significance of each estimated equation seems to validate the model. The estimated long-run parameters are used to perform simulation experiments to determine the model’s ability to track historical data and to assess the behaviour of the key macroeconomic variables in response to the changes in selected exogenous variables. The results indicate that the majority of macroeconomic variables follow an increasing trend over the period of simulation, 2009-2013.

Keywords: Macroeconometric Model; Pakistan Economy, Cointegration, Forecasting (search for similar items in EconPapers)
JEL-codes: C20 C53 E1 E6 O5 R10 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2011
New Economics Papers: this item is included in nep-cmp, nep-for and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:pid:wpaper:2011:69

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