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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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Suggested Citation

  • Muhammad Arshad Khan & Abdul Qayyum, 2006. "Trade Liberalisation, Financial Sector Reforms, and Growth," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 711-731.
    • Handle: RePEc:pid:journl:v:45:y:2006:i:4:p:711-731
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    References listed on IDEAS

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    7. 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.
    8. Ali Gulzar, 2020. "Financial Sector Reforms and its Impact on Economy of Pakistan," Asian Journal of Law and Economics, De Gruyter, vol. 11(2), pages 1-18, August.
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    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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