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 liberalization policies play an important role in nhancing economic growth in Pakistan in the long-run. However, the short-run responses of real deposit rate and trade policy variables are very low, suggesting further acceleration of reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated equation remains stable over the period of study as indicated by CUSUM and CUSUMQ stability tests.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
6523.
Length: Date of creation: Dec 2007 Date of revision: Publication status: Published in Economic Analysis Working Papers 14.6(2007): pp. 1-24 Handle: RePEc:pra:mprapa:6523
Find related papers by JEL classification: O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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