Book

Description

The relative effectiveness of monetary policy and the fiscal policy in economic growth and economic stability in Pakistan are discussed in this study. The time series data for the period 1973-2014 are used to find the results. The objective of this study is to find out the methods through which the fiscal policy and the monetary policy can lead to enhance economic growth and stable price level in Pakistan. This study draws attention to recent fiscal and monetary disputes and also discovers policies which might be helpful to improve the fiscal and monetary structure in Pakistan. The aim of both monetary and fiscal policies is to assure that the economy achieves stable extension of its economy with no rapid inflation. The methodology of Co-integration and the VECM are applied to discover the results. The augmented Dickey Fuller unit root method is applied to verify the time series properties. The ARDL technique is applied to discover the long-run association between fiscal policy, monetary policy and economic growth in Pakistan. Variance decompositions and impulse response functions are also estimated to examine the long-run stability of the link between growths of the macro-economic variables in Pakistan.