Trade,Financial and Growth Nexus in Pakistan

Arshad Khan, Muhammad and Qayyum, Abdul (2007): Trade,Financial and Growth Nexus in Pakistan. Published in: Economic Analysis Working Papers , Vol. 6, No. 14 (2007): pp. 1-24.

Abstract

This paper empirically investigates the impact of trade and financial liberalization 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 liberalization policies play an important role in nhancing economic growth in Pakistan in the long-run. However, the short-run responses of real deposit rate and trade policy variables are very low, suggesting further acceleration of 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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade Liberalization, Financial Development, Economic Growth, Bound Test
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; G - Financial Economics > G1 - General Financial Markets > G10 - General