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Whether Fiscal Stance or Monetary Policy is Effective for Economic Growth in Case of South Asian Countries?

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Author Info

  • Shahid Ali

    (Institute of Business Administration and Applied Economics Research Centre, University of Karachi.)

  • Somia Irum

    (Applied Economics Research Centre, University of Karachi.)

  • Asghar Ali

    (Applied Economics Research Centre, University of Karachi.)

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    Abstract

    The relative significance of fiscal and monetary policy has been one of the most unsettled issues in economics. Relevant literature shows that the study of the effectiveness of monetary and fiscal policy is equivalent to the study of the relative efficacy of Keynesian economics and monetarism. This study investigates the relative effectiveness of both types of policies in the context of modern panel data analysis in case of South Asian Countries during the period from 1990 to 2007 to test the Monetarist and Keynesian claims, and to find out that whether the policy instruments have a significant relationship with economic growth. Im, Pesaran, and Shin and Levin, Lin, and Chu tests have been used to investigate the order of integration. For long run and short run relationship we utilis ed the advance Autoregressive Distributed Lag Model ARDL a co-integration (panel) test and ECM (Error Correction Method) respectively.

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    Bibliographic Info

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

    Volume (Year): 47 (2008)
    Issue (Month): 4 ()
    Pages: 791-799

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    Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:791-799

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    Related research

    Keywords: Fiscal Policy; Monetary Policy; Panel Co-integration;

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    Cited by:
    1. SENBATA, Sisay Regassa, 2011. "How applicable are the new Keynesian DSGE models to a typical low-income economy?," Working Papers 2011016, University of Antwerp, Faculty of Applied Economics.
    2. Sudipto Mundle & N.R. Bhanumurthy & Surajit Das, 2010. "Fiscal Consolidation with High Growth : A Policy Simulation Model for India," Macroeconomics Working Papers 23070, East Asian Bureau of Economic Research.
    3. Blommestein, H.J. & Eijffinger, S.C.W. & Qian, Z., 2011. "Monetary Policy Rules, Adverse Selection and Long-Run Financial Risk," Discussion Paper 2011-121, Tilburg University, Center for Economic Research.
    4. Clerc, L. & Dellas, H. & Loisel, O., 2010. "To be or not to be in monetary union: A synthesis," Working papers 308, Banque de France.
    5. Jawaid, Syed Tehseen & Arif, Imtiaz & Naeemullah, Syed Muhammad, 2010. "Comparative analysis of monetary and fiscal Policy: a case study of Pakistan," MPRA Paper 30850, University Library of Munich, Germany, revised Dec 2010.

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