Estimating the Long-Run Creditworthiness of Pakistan

KARIM HASHMI, RIMSHA and QAYYUM, ABDUL (2016): Estimating the Long-Run Creditworthiness of Pakistan. Published in: Research Journal Social Science , Vol. 6, No. 2 (2017): pp. 75-87.

Abstract

The paper analyses the long-run creditworthiness of Pakistan. The analysis is conducted on time series data of the years 1972-2013. Two Probit Models are estimated by Maximum Likelihood Method. Three specifications of Probit Model of long-run creditworthiness of Pakistan are estimated. These alternative specifications are due to measurement of expected net capital inflows/GDP ratio. It is found that with the inclusion of lagged net capital inflows/GDP ratio in the first Probit Model, the DS/GDP ratio and INV/GDP ratio are found to be significantly impacting the long-run creditworthiness of Pakistan. In the second Probit Model, when POP/GDP ratio is included as an alternate to INV/GDP ratio, the two alternative specifications for expected net capital inflows/GDP ratio mainly the current values of net capital inflows/GDP ratio and the lagged values of net capital inflows/GDP ratio, DS/GDP ratio and POP/GDP ratio all significantly impact the long-run creditworthiness of Pakistan.

• Item Type: MPRA Paper
• Language: English
• Keywords: Long-run Creditworthiness, Pakistan, Probit Model, Maximum Likelihood Method (MLM).
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E0 - General

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