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What Matters for Economic Growth in Pakistan: Fiscal Policy or its Composition?

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  • Khalil Ahmad
  • Sajida Wajid

Abstract

This study employed autoregressive distributed lag (ARDL) model to examines the impact of various fiscal policy variables, such as, productive expenditures, non-productive expenditures, distortionary taxes and non-distortionary taxes on economic growth in Pakistan in the framework of endogenous growth model. Our results revealed that non-productive expenditures and non-distortionary taxation have neutral impact on economic growth in both the long run and short run. Productive expenditures affect economic growth positively and significantly. Distortionary taxes retard economic growth. Human capital proxied by secondary school enrollment enhances per capita GDP. Impact of labor force on GDP per capita is negative and insignificant.

Suggested Citation

  • Khalil Ahmad & Sajida Wajid, 2013. "What Matters for Economic Growth in Pakistan: Fiscal Policy or its Composition?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(2), pages 196-215.
    • Handle: RePEc:asi:aeafrj:v:3:y:2013:i:2:p:196-215:id:986
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    Citations

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    Cited by:

    1. Ibrar Hussain & Jawad Hussain & Arshad Ali & Shabir Ahmad, 2021. "A Dynamic Analysis of the Impact of Fiscal Adjustment on Economic Growth: Evidence From Pakistan," SAGE Open, , vol. 11(2), pages 21582440211, June.
    2. Amal MATALLAH & Amal MATALLAH, 2017. "Does fiscal policy spur economic growth? Empirical evidence from Algeria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(612), A), pages 125-146, Autumn.
    3. Muhammad Akram GILAL* & Muhammad AJMAIR** & Sohail FAROOQ***, 2019. "Structural Changes And Economic Growth In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 29(1), pages 35-51.
    4. Sultan Hafeez Rahman & Muhammad Shahadat Hossain Siddiquee, 2022. "Short- and long-run growth effects of fiscal policy in Bangladesh," SN Business & Economics, Springer, vol. 2(9), pages 1-21, September.
    5. Mungroo, Albert & Ooft, Gavin & Tjon Kie Sim-Balker, Peggy, 2014. "Government Expenditure in Suriname: A Stimulus or Impediment to Growth," EconStor Preprints 215531, ZBW - Leibniz Information Centre for Economics.

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