Jawaid, Syed Tehseen and Arif, Imtiaz and Naeemullah, Syed Muhammad (2010): Comparative analysis of monetary and fiscal Policy: a case study of Pakistan. Published in: Nice Research Journal , Vol. 3, No. 1 (December 2010): pp. 58-67.
Download (265Kb) | Preview
This study investigates the comparative effect of fiscal and monetary policy on economic growth in Pakistan using annual time series data from 1981 to 2009. The cointegration result suggests that both monetary and fiscal policy have significant and positive effect on economic growth. The coefficient of monetary policy is much greater than fiscal policy which implies that monetary policy has more concerned with economic growth than fiscal policy in Pakistan. The implication of the study is that the policy makers should focus more on monetary policy than fiscal to enhance economic growth. The role of fiscal policy can be more effective for enhancing economic growth by eliminating corruption, leakages of resources and inappropriate use of resources. However, the combination and harmonization of both monetary and fiscal policy are highly recommended.
|Item Type:||MPRA Paper|
|Original Title:||Comparative analysis of monetary and fiscal Policy: a case study of Pakistan|
|Keywords:||Monetary Policy, Fiscal Policy, Economic Growth.|
|Subjects:||H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General
E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Syed Tehseen Jawaid|
|Date Deposited:||14. Jun 2011 08:42|
|Last Modified:||03. Jul 2013 05:18|
Adefeso, H.A. and Mobolaji, H.I. (2010). The Fiscal-Monetary Policy and Economic Growth in Nigeria: Further Empirical Evidence, Pakistan Journal of Social Sciences, 7(2):137-142.
Ajayi, S.I. (1974). An Econometric Case Study of the Relative Importance of Monetary and Fiscal Policy in Nigeria. The Bangladesh Economic Review, 2(2):559-576.
Ajisafe, R.A. and Folorunso, B.A. (2002). The Relative Effectiveness of Fiscal and Monetary Policy in Macroeconomic Management in Nigeria, The African Economic and Business Review, 3(1):23-40.
Ali, S., Irum, S. and Ali, A. (2008). Whether Fiscal Stance or Monetary Policy is Effective for Economic Growth in Case of South Asian Countries?, The Pakistan Development Review, 47(4):791 – 799.
Anderson, L.C. and Jordan, J. L. (1968). Monetary and Fiscal Actions: A Test of Their Relative Importance in Economic Stabilization, Federal Reserve Bank of St. Louis Review, 80:29-45.
Cochrane, D. and Orc utt. G.H. (1949). Application of Least Square Regression to Relationship Containing Autocorrelated Error Term, Journal of the American Statistical Association, 44:32-61.
Darrat, Ali.F. (1984). The Dominant Influence of Fiscal Actions in Developing Countries, Eastern Economic Journal, 10(3):271-284.
Dickey. D. A, and Fuller. W.A. (1979). Distribution of the Estimation for Autoregressive Time Series with a Unit Root, Journal of American Statistical Association 79:355–367.
Elliot, J. W. (1975). The Influence of Monetary and Fiscal Actions on Total Spending: The St. Louis Total Spending Equation Revisited, Journal of Money Credit and Banking, 7:181-192.
Gujrati, D.N. (2004). Basic Econometrics, 4th ed. McGraw-Hill.
Johansen, S. and Juselius. K. (1990). Maximum Likelihood Estimation and Inference on Cointegration with Applications to the Demand for Money, Oxford Bulletin of Econometrics and Statistics, 52:169-210.
Johansen, S. (1988). Statistical Analysis of Cointegration Vectors, Journal of Dimension and Control, 12:231-254.
Khosravi. A and Karimi, M.S. (2010). To Investigation the Relationship between Monetary, Fiscal Policy and Economic Growth in Iran: Autoregressive Distributed Lag Approach to Cointegration, American Journal of Applied Sciences, 7(3):420-424.
Olaloye, A. O. and Ikhide, S. I. (1995). Economic Sustainability and the Role of Fiscal and Monetary Policies in A Depressed Economy: The Case Study of Nigeria, Sustainable Development 3:89–100.
Pakistan Economic Survey. (2010). Government of Pakistan, Finance Division, Islamabad.
Stiglitz, Joseph E. and Walsh, C. E. (2002). Economics, 3rd ed. W.W. Norton & company Ltd, New York.