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Financial Structure, Misery Index, and Economic Growth: Time Series Empirics from Pakistan

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  • Nianyong Wang

    (School of Finance, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Muhammad Haroon Shah

    (School of Finance, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Kishwar Ali

    (School of Finance, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Shah Abbas

    (School of Economics, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Sami Ullah

    (School of Economics, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

This study empirically analyzes the impact of the financial structure and misery index on economic growth in Pakistan. We adopted Autoregressive-Distributed Lag (ARDL) for a co-integration approach to the data analysis and used time series data from 1989 to 2017. We used GDP as the dependent variable; the Financial Development index (FDI) and misery index as the explanatory variables; and remittances, real interest, and trade openness as the control variables. The empirical results indicate the existence of a long-term relationship among the included variables in the model and the FD index, misery index, interest rate, trade openness, and remittances as the main affecting variables of GDP in the long run. The government needs appropriate reform in the financial sector and external sector in order to achieve a desirable level of economic growth in Pakistan. The misery index is constructed based on unemployment and inflation, which has a negative implication on the economic growth, and the government needs policies to reduce unemployment and inflation.

Suggested Citation

  • Nianyong Wang & Muhammad Haroon Shah & Kishwar Ali & Shah Abbas & Sami Ullah, 2019. "Financial Structure, Misery Index, and Economic Growth: Time Series Empirics from Pakistan," JRFM, MDPI, vol. 12(2), pages 1-15, June.
    • Handle: RePEc:gam:jjrfmx:v:12:y:2019:i:2:p:100-:d:239789
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