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Trade Liberalisation, Financial Sector Reforms, and Growth

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  • Muhammad Arshad Khan

    (Pakistan Institute of Development Economics (PIDE), Islamabad.)

  • Abdul Qayyum

    (Pakistan Institute of Development Economics (PIDE), Islamabad.)

Abstract

This paper empirically investigates the impact of trade and financial liberalization on economic growth in Pakistan using annual observations over the period 1961-2005. The analysis is based on the bound testing approach of cointegration advanced by Pesaran et al (2001). The empirical findings suggest that both trade and financial policies play an important role in enhancing growth in Pakistan in the long-run. However, the short-run response of real deposit rate and trade policy variable is very low, suggesting further acceleration of reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated short-run dynamics are stable as indicated by CUSUMQ test.

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Bibliographic Info

Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 45 (2006)
Issue (Month): 4 ()
Pages: 711-731

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Handle: RePEc:pid:journl:v:45:y:2006:i:4:p:711-731

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Cited by:
  1. Qazi Hye & Wee-Yeap Lau & Marie-Aimée Tourres, 2014. "Does economic liberalization promote economic growth in Pakistan? An empirical analysis," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2097-2119, July.
  2. Uddin, Gazi Salah & Sjö, Bo & Shahbaz, Muhammad, 2013. "The Causal Nexus between Financial Development and Economic Growth in Kenya," MPRA Paper 49262, University Library of Munich, Germany, revised 23 Aug 2013.
  3. Ur Rehman, Ijaz & Shahbaz, Muhammad & Kyophilavong, Phouphet, 2013. "Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania," MPRA Paper 51813, University Library of Munich, Germany, revised 29 Nov 2013.

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