Fiscal and Monetary Policy Interactions in Pakistan Using a Dynamic Stochastic General Equilibrium Framework
Journal Title: Research Journal Social Sciences (Online) - Year 2017, Vol 6, Issue 1
Abstract
Currently Pakistan’s economy is under stress and registered a sluggish growth for many years in a row. The performance of major economic indicators is not satisfactory. Low investment, double digit inflation, fiscal imbalances and low external capital inflows indicates the severity of the grave economic situation. This paper investigates fiscal and monetary policy interaction in Pakistan using dynamic stochastic general equilibrium model. Finding of the paper reveals that fiscal and monetary policy interacts with each other and with other macroeconomic variables. Inflation responds to fiscal policy shocks in the form of government spending, revenue and borrowing shocks. Monetary authority’s decisions are also affecting fiscal policy variables. It is also evident that fiscal discipline is critical for the effective formulation and execution of monetary policy.
Authors and Affiliations
MUHAMMAD SHAHID, Abdul Qayyum, Waseem Shahid Malik
Keywords
Related Articles
- EP ID EP254509
- DOI -
- Views 117
- Downloads 0
Remittances and Asset Accumulation of Household in Pakistan
Assets accumulated by household is important topic, it is investment by household to maximise their utility for present time and for future. It is stock investment which help the household to use these assets in tough ti...
Estimating the Long-Run Creditworthiness of Pakistan
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 Pr...
Analyse Risk-Return Paradox: Evidence from Electricity Sector of Pakistan
This study analysis risk return relationship of the electricity companies of Pakistan by using the return series of these electricity companies. Financial time series data have the property of autoregressive heteroscedas...
Socioeconomic and Environmental Factors Affecting House Rents in Islamabad
Socioeconomic and environmental factors play an important role in determining the housing prices. This study investigates both socioeconomic and environmental factors that influence the rental price of housing in Islamab...
The Impact of Trade Cost on Exports of Pakistan: An Empirical Modelling
This study takes into the account effect on exports going from Pakistan by key trading partners , tariff imposed by exporting partners, population within and outside Pakistan, distance with trading partner and exchange r...