Estimating the Effects of Fiscal Policy on Economic Growth in Pakistan: A Time Series Analysis

Authors

  • Syed Mumtaz Ali Kazmi National College of Business Administration and Economics, Pakistan
  • Syed Muhammad Imran National College of Business Administration and Economics, Pakistan
  • Hassan Mujtiba Nawaz Saleem Universiti Utara, Malaysia

DOI:

https://doi.org/10.52461/sabas.v1i2.435

Keywords:

Fiscal policy, economic growth, time-series, ADF, VECM, Pakistan, co-integration test

Abstract

This paper is an effort to inspect the reverberations of fiscal policy on economic growth in short along with long run. To fulfill this purpose, annual time series data for the period 1980 to 2014 is employed. At first, Augmented Dickey-Fuller (ADF) unit root test is used to check stationarity of data. The results of ADF test denote that growth rate of gross domestic product, total government revenues, total government expenditures, fiscal deficit, physical capital, and labor force participation rate are stationary at first difference, I(1). Secondly, we deploy Johansen-Juselius co-integration test to examine long run association of fiscal policy and economic growth. The results of this test reveal long run association of fiscal policy and economic growth. Finally, we treat variables by using Vector Error Correction Model (VECM) to examine short run dynamics as well as long run causal relationships. The results of this model indicate long run causal association of fiscal policy and economic expansion.

Author Biographies

Syed Mumtaz Ali Kazmi, National College of Business Administration and Economics, Pakistan

Syed Mumtaz Ali Kazmi, Lecturer, National College of Business Administration and Economics, Pakistan

Syed Muhammad Imran, National College of Business Administration and Economics, Pakistan

Syed Muhammad Imran, Lecturer, National COollege of Business Administration and Economics, Pakistan

Hassan Mujtiba Nawaz Saleem, Universiti Utara, Malaysia

Hassan Mujtiba Nawaz Saleem, Research Scholar, Universiti Utara, Malaysia

South Asian Review of Business and Administrative Studies

Downloads

Published

2019-12-31

How to Cite

Kazmi, S. M. A., Imran, S. M., & Saleem, H. M. N. (2019). Estimating the Effects of Fiscal Policy on Economic Growth in Pakistan: A Time Series Analysis. South Asian Review of Business and Administrative Studies (SABAS), 1(2), 67–80. https://doi.org/10.52461/sabas.v1i2.435

Issue

Vol. 1 No. 2 (2019): South Asian Review of Business and Administrative Studies

Section

Articles

License

The authors submitting and publishing in SABAS agree to the copyright policy under Creative Commons CC-BY-NC 4.0 International license (Attribution-Non Commercial 4.0 International). Under this license, the authors published in SABAS retain the copyright including publishing rights of their scholarly work and agree to let others remix, tweak, and build upon their work non-commercially.