Monetary-fiscal-trade policy and economic growth in Pakistan: time series empirical investigation

Syed Tehseen Jawaid, Faisal Qadri () and Ali Nasir

MPRA Paper from University Library of Munich, Germany

Abstract: This study empirically examines the effect of monetary, fiscal and trade policy on economic growth in Pakistan using annual time series data from 1981 to 2009. Money supply, government expenditure and trade openness are used as proxies of monetary, fiscal and trade policy respectively. Cointegration and error correction model indicate the existence of positive significant long run and short run relationship of monetary and fiscal policy with economic growth. Result also indicates that monetary policy is more effective than fiscal policy in Pakistan. In contrast, trade policy has insignificant effect on economic growth both in the short run and in the long run. In light of the findings, it is suggested that the policy makers should focus more on monetary policy in order to ensure economic growth in the country. It is also recommended that further research should be conducted to find out such components of exports and imports which lead to the ineffectiveness of trade policy to enhance economic growth in Pakistan.

Keywords: Monetary; Fiscal; Trade; Economic Growth (search for similar items in EconPapers)
JEL-codes: E42 E62 F13 F43 (search for similar items in EconPapers)
Date: 2011-07-21
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-mon
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Citations: View citations in EconPapers (13)

Published in International Journal of Economics and Financial Issues 3.1(2011): pp. 133-138

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Related works:
Journal Article: Monetary-Fiscal-Trade Policy and Economic Growth in Pakistan: Time Series Empirical Investigation (2011)
Working Paper: Monetary-fiscal-trade policy and economic growth in Pakistan: Time series empirical investigation (2011)
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