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Trade Liberalization, Financial Sector Reforms and Growth

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Author Info
Khan, M. Arshad
Qayyum, Abdul

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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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File URL: http://mpra.ub.uni-muenchen.de/2655/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2655.

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Date of creation: 2006
Date of revision: 2006
Handle: RePEc:pra:mprapa:2655

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Related research
Keywords: Financial Sector Reforms Trade Liberalization Growth Pakistan

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Find related papers by JEL classification:
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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