Quantifying Economic Uncertainty in Pakistan Using the MIMIC Model

Abstract

Objective: This study quantitatively explores Economic Uncertainty in Pakistan, utilizing the Multiple Indicator and Multiple Causes (MIMIC) model with indicators such as Foreign Market Instability, Political Stability, Inflation, GDP, Financial Crises, and Stock Market Volatility to provide a comprehensive assessment.

Research Gap: The research addresses the gap in understanding the complex nature of Economic Uncertainty within Pakistan's economic landscape, emphasizing the role of various indicators in quantifying it.

Design/Methodology/Approach: The study employs the MIMIC model and the Hodrick-Prescott (HP) filter to analyze Economic Uncertainty in Pakistan. The limitations of this methodology are acknowledged.

Main Findings: The study reveals that Economic Uncertainty significantly impacts various macroeconomic variables, providing insights into its multifaceted nature.

Theoretical/Practical Implications of the Findings: The research findings have vital implications for policymakers, aiding in the formulation of informed policies and investment strategies for economic stability and growth.

Originality/Value: This research contributes to the understanding of Economic Uncertainty in Pakistan by delving into its multifaceted aspects and influential factors. It provides a comprehensive foundation for informed decision-making in economic policy and investment strategies, ultimately promoting economic stability and growth.