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The Coordination of Fiscal and Monetary Policies in Pakistan: An Empirical Analysis

Author

Listed:
  • Zubaria Andlib

    (Federal Urdu University of Arts, Science and Technology, Islamabad)

  • Azra Khan

    (School of Economics Sciences, Federal Urdu University of Arts, Science and Technology, Islamabad)

  • Ihtsham Ul Haq

    (School of Economics Sciences, Federal Urdu University of Arts, Science and Technology, Islamabad.)

Abstract

The role of macroeconomic policies is very important for the achievement of a stable path in the economy. There are two major groups of policies, fiscal side policies which mainly focus to regulate aggregate demand in the economy and monetary side policies which are mainly responsible to stabilise prices in the economy. But the objectives and measures taken for the achievement of the goals of the two sides are often conflict with each other, so there is a need for coordination between two policies to achieve the set objective. The study focuses on the behaviour of monetary and fiscal policies integration in Pakistan for the time period 1980 to 2011. It finds that there is a weak coordination between monetary and fiscal authorities. We can infer that fiscal policy considerably dominate the monetary policy even State Bank of Pakistan (SBP) is enjoying sufficient amount of independence.

Suggested Citation

  • Zubaria Andlib & Azra Khan & Ihtsham Ul Haq, 2012. "The Coordination of Fiscal and Monetary Policies in Pakistan: An Empirical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(4), pages 695-704.
  • Handle: RePEc:pid:journl:v:51:y:2012:i:4:p:695-704
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    Keywords

    Fiscal and Monetary Policy; Policy Coordination;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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