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Fiscal Imbalances, Poverty and Inequality in Pakistan

Author

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  • Ullah, Irfan
  • Baber, Naimatullah

Abstract

This paper has analyzed the fiscal imbalances, poverty and inequality with relevance to Pakistan. We use time series data from 1981 to 2010 and employ Autoregressive Distributed Lag Model (ARDL) to cointegration for estimation. The empirical findings suggest that fiscal deficits increase the poverty level and provide biases for inequality. Since deficit is financed through money supply, government debt and indirect taxes which threaten the purchasing power of the poor and drag them towards poverty. Indeed most of government spending is misallocated due corruption and weak institutions; consequently money accumulates in few hands which wider gap between rich and poor, hence generates inequality.

Suggested Citation

  • Ullah, Irfan & Baber, Naimatullah, 2014. "Fiscal Imbalances, Poverty and Inequality in Pakistan," Public Finance Quarterly, Corvinus University of Budapest, vol. 59(1), pages 86-93.
    • Handle: RePEc:pfq:journl:v:59:y:2014:i:1:p:86-93
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    File URL: https://unipub.lib.uni-corvinus.hu/8933/
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    More about this item

    Keywords

    Fiscal imbalances; poverty; inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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