The Analysis of Social and Institutional Determinants of the Public Expenditure Buoyancy in Pakistan

Abstract

Objective: This research intended to quantify the impact of social and institutional handles on the public expenditure’s buoyancy in Pakistan.

Research Gap: Very few studies explained the impact of the social and institutional handles on the public expenditure’s buoyancy.

Design/Methodology/Approach: This study employed TSD from 1990 to 2021. The study employed Augmented Dickey Fuller Test, Johansen Co-integration and Autoregressive Distributive Lag model for the analysis of the data.

The Main Findings: The results stated that unemployment, literacy rate, Government size, dependency ratio and corruption have positive while Govt effectiveness, fiscal decentralization, income inequality and fiscal illusion have negative impact on public expenditure’s Buoyancy.

Implications of the Findings: This study suggested that to reduce unemployment Govt should take measures to attract FDI, focus on skills development, initiate labor-intensive projects and encourage the entrepreneurship. This study also suggested that Govt must make measures to enhance literacy rate particularly for girls, should reduce its size in term of employee, reduce dependent population, and take measures to eliminate the corruption. Govt should improve quality of bureaucracy, Govt efficiency, effectiveness, education and infrastructure. Govt should also delegate the financial, political and administrative control to the lower tier of the political system. Finally, it is also suggested that Govt should enhance the Benazir Income Program, Sehat Sahulat Program and other measures to eradicate poverty and improve income distribution.