Empirical Analysis of Fiscal Imbalance in Pakistan
DOI:
https://doi.org/10.51153/mf.v17i1.519Keywords:
Keynesian School of Thoughts, Sovereign Macroeconomic Indicators, Fiscal Imbalance, Autoregressive Distributed Lagged (ARDL)Abstract
This research will be incorporating vital macroeconomic determinants that have significant and solid long-short run association with a fiscal imbalance of Pakistan. We have taken dependent variable as fiscal imbalance and independent variables as total debt service, trade, broad money, current account balance, net inflows, government expenditure, and government income as % of GDP, whereas GDP per capita (constant 2010 US$), Total debt service (% of GNI), GDP deflator (base year varies by country) and foreign direct investment, data was collected from 1970 to 2019 on an annually. Results revealed a long-run association between dependent and independent variables, and there is a short-run relationship between Fiscal Imbalance and GDP per Capita. This piece of the article analyses the relationship of a fiscal imbalance concerning vital macroeconomic indicators. This research conclusively represents the impact of macroeconomic indicators on Pakistan's fiscal imbalance in the long-short run.References
Abd-Rahman, N. H. (2012). How Federal Government’s Debt Affect the Level of Economic Growth? International Journal of Trade, Economics and Finance, 3(4), 323-339.
Agarwal, A., Mishra, A., & Gupta, M. (2019). How Does Economic Growth React to Fiscal Deficit and Inflation? An ARDL Analysis of China and India. Arthshastra Indian Journal of Economics & Research, 8(4), 7- 15.
Ahmed, O., & Mashkoor, A. (2016). The Wrong Impact of Fiscal Imbalance on Economic Growth and Monetary Policy Consequences: A Case Study of Pakistan. {Available}. https://mpra.ub.uni-muenchen.de/69752/.
Ahmed, Q. M., & Muhammad, S. D. (2010). Determinant of tax buoyancy: empirical evidence from developing countries. European Journal of Social Sciences, 13(3), 408-418.
Ahmad, A., Ahmad, N., & Ali, S. (2013). Exchange Rate and Economic Growth in Pakistan (1975-2011). Journal of Basic and Applied Scientific Research, 3(8), 740–746.
Ahmed, Q.M. (2010). Determinants of Tax Buoyancy: Empirical Evidence from Developing Countries. European Journal of Social Sciences. 13(3), 408-414
Ali, S., & Ahmad, N. (2010). The effects of fiscal policy on economic growth: Time series evidence from Pakistan. The Pakistan Development Review, 49(4), 497–512.
Awan, A. G., Gulzar, J., & Gulzar, J. (2020). Relationship Between Fiscal Deficit and Economic Growth: Evidence From Pakistan. Global Journal of Management, Social Sciences, and Humanities, 90(1), 90–113.
Boztosun, D. (2010). MKB’de i?lem gören banka hisse senetlerinin getirileri ile makro ekonomik faktörler aras?ndaki ili?kinin analizi. Üçüncü Sektör Kooperatifçilik, 45(4), 39- 53.
Canzoneri, M. B., Cumby, R. E., & Diba, B. T. (2001). Is the price level determined by the needs of fiscal solvency? American Economic Review, 91(5), 1221–1238.
Catão, L. A. V., & Terrones, M. E. (2005). Fiscal deficits and inflation. Journal of Monetary Economics, 52(3), 529–554.
Chaudhry, I. S., & Munir, F. (2010). Determinants of Low Tax Revenue in Pakistan. Pakistan Journal of Social Sciences (PJSS), 30(2), 439–452.
Faridi, M. Z., & Nazar, R. (2013). Impact of fiscal autonomy on poverty in Pakistan. Pakistan Journal of Commerce and Social Sciences (PJCSS), 7(1), 141-156.
Fatima, G., Ahmed, A. M., & Rehman, W. U. (2011). Fiscal Deficit and Economic Growth: An Analysis of Pakistan’s Economy. International Journal of Trade, Economics, and Finance, 2(6), 501–504.
Feldstein, M. (2002). The role of discretionary fiscal policy in a low-interest-rate environment. National Bureau of Economic Research {Available}, http://www.nber.org /papers/w 9203%5CnhttpCnhttp.
Gounder, N., Narayan, P. K., & Prasad, A. (2007). An empirical investigation of the relationship between government revenue and expenditure: The case of the Fiji Islands. International Journal of Social Economics, 34(3), 147–158.
Gülcan, Y., & Bilman, M. E. (2005). The effects of budget deficit reduction on the exchange rate. In 1st International Conference on Business, Management and Economics 2(9), 1-15.
Hakkio, C. S. (1998). The effects of budget deficit reduction on the exchange rate. Finance a User - Czech Journal of Economics and Finance, 48 (9), 567- 582.
Hanif, M. (2012). A Note on Food Inflation in Pakistan. Pakistan Economic and Social Re- view, 50(2), 183–206.
Iqbal, N., ud Din, M., & Ghani, E. (2017). The Fiscal Deficit and Economic Growth in Pakistan: New Evidence. The Lahore Journal of Economics, 22(Special Edition), 53–72.
Jalil, A., Tariq, R., & Bibi, N. (2014). Fiscal deficit and inflation: New evidences from Pakistan using a bounds testing approach. Economic Modelling, 37, 120–126.
King, A. L., Miller, J. M., Raymond, J., Fabian, A. C., Reynolds, C. S., Kallman, T. R., ... & Ru- pen, M. P. (2012). An extreme X-ray disk wind in the black hole candidate IGR J17091? 3624. The Astrophysical Journal Letters, 746(2), 1-5.
Kydland, F., & Prescott, E. (1982). Time to Build and Aggregate Fluctuations. Econometric 50 (6), 1345–1370.
Laopodis, N. T. (2009). Fiscal policy and stock market efficiency: Evidence for the United States. Quarterly Review of Economics and Finance, 49(2), 633–650.
Leeper, E. M., & Leith, C. (2016). Understanding inflation as a joint monetary–fiscal phenomenon. In Handbook of Macroeconomics (Vol. 2, pp. 2305-2415). Elsevier.
Li, T., & Du, T. (2021). Vertical fiscal imbalance, transfer payments, and fiscal sustainability of local governments in China. International Review of Economics & Finance, 74, 392- 404.
Lin, H. Y., & Chu, H. P. (2013). Our fiscal deficits inflationary? Journal of International Money and Finance, 32(1), 214-233.
Mohanty, M. S. (2012). Fiscal policy, public debt and monetary policy in EMEs: an over- view. BIS Paper, (67a). {Available}.https://www.bis.org/publ/bppdf/bispap67.pd- f#page=5.
Nasir, M. A., & Leung, M. (2021). US trade deficit, a reality check: New evidence incorporating asymmetric and non-linear effects of exchange rate dynamics. The World Economy, 44(3), 818-836.
Osamwonyi, I. O., & Evbayiro-Osagie, E. I. (2012). The Relationship between Macroeconomic Variables and Stock Market Index in Nigeria. Journal of Economics, 3(1), 55–6
Pekarski, S. (2011). Budget deficits and inflation feedback. Structural Change and Economic Dynamics, 22(1), 1–11.
Rahman, N. H. A. (2012). The relationship between budget deficit and economic growth from Malaysia’s perspective: An ARDL Approach. International Conference on Economics, Business Innovation, 38, 54–58.
Rathnayake, A. S. K. (2020). Sustainability of the fiscal imbalance and public debt under fiscal policy asymmetries in Sri Lanka. Journal of Asian Economics, 66, 1-16.
Ribeiro, R. S. M., McCombie, J. S., & Lima, G. T. (2017). Some unpleasant currency-de- valuation arithmetic in a post Keynesian macromodel. Journal of Post Keynesian Eco nomics, 40(2), 145-167.
Samimi, A. J., Ghaderi, S., Hosseinzadeh, R., & Nademi, Y. (2012). Openness and inflation: New empirical panel data evidence. Economics Letters, 117(3), 573-577.
Rozeff, M. S. (1994), money and stock prices. Market efficiency and the lag in effect of monetary policy. Journal of Financial Economics, 1(3), 245-302.
Selvarajan, S. K., & Ab-Rahim, R. (2020). Financial Integration and Economic Growth. Journal of Economic Integration, 35(1), 191-213.
Sima, V., Gheorghe, I. G., Subi?, J., & Nancu, D. (2020). Influences of the industry 4.0 revolution on the human capital development and consumer behavior: A systematic review. Sustainability, 12(10), 1-28.
Theodore, N. (2020). Governing through austerity: logics of neoliberal urbanism after the global financial crisis. Journal of Urban Affairs, 42(1), 1-17.
Tiwari, A. K., Tiwari, A. P., & Pandey, B. (2012). Fiscal deficit and inflation: What causes what? The case of India. Journal of International Business and Economy, 13(1), 57-81.
Urata, S. (2020). US–Japan trade frictions: The past, the present, and implications for the US–China trade war. Asian Economic Policy Review, 15(1), 141-159.
Were, M (2001). The impact of external debt on economic growth in Kenya: An empirical assessment, Wider Discussion Paper, No. 2001/116, The United Nations University World Institute for Development Economics Research (UNUWIDER), Helsinki.
Zakrai M. (2010). Openness and Inflation: Evidence from Time Series Data. Do?u? Üniver- sitesi Dergisi, 2(11), 313–322.
Downloads
Published
Issue
Section
License
- Copyright of all the submissions to the Market Forces will remain to the contributors.
- Anyone is allowed to distribute, remix, tweak, and build upon his/her work, even commercially, as long as it is credited/cited to the original contributors of the Market Forces.
