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The Effect Of Trade Liberalization On Expenditure Structure Of Pakistan

Author

Listed:
  • KHALIL AHMAD

    (Assistant professor; Department of Economics Govt. Islamia College Civil Lines, Lahore, Pakistan)

  • AMJAD ALI

    (Corresponding author: Associate Researcher; European School of Administration and Management (ESAM)-France. Assistant Professor at Lahore School of Accountancy and Finance, University of Lahore, Pakistan)

  • MICHAEL YANG

    (Assistant Professor; St. Lawrence University 23 Romoda Drive, Canton, NY 13617 Hepburn Hall 017)

Abstract

Demand side public policy paly a risk reducing role for imperfect sectors of the developing economies through public investment during liberalization. Public sector investment, composition and structure play an important role to determine the comparative advantage for productive sector. This study explores the effect of trade liberalization and trade tax revenue on expenditure structure of Pakistan during 1975-2019. Autoregressive Distributed Lag approach has been used for examining the long run co-integration among the expenditure structure and trade liberalization and Error-Correction model is used for short run dynamics of the concerned variables. The empirical result shows that trade tax revenue has positive impact on expenditure structure in long run but not in short run. Trade liberalization, budget deficit and defence expenditure have negative association with expenditure structure. Underground economy has also negative impact on expenditure structure but most surprising result of political stability shows negative relation with expenditure structure. As more political stability in Pakistan, the share of non-development expenditure is higher as compared to development expenditure during trade liberalization.

Suggested Citation

  • Khalil Ahmad & Amjad Ali & Michael Yang, 2022. "The Effect Of Trade Liberalization On Expenditure Structure Of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(1), pages 73-84, March.
    • Handle: RePEc:rfh:bbejor:v:11:y:2022:i:1:p:73-84
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    References listed on IDEAS

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    Cited by:

    1. Naima Mubeen & Dr. Muhammad Abdul Quddus, 2023. "Trade Horizons: A Comprehensive Study of Determinants Shaping Export Diversification in Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 446-458.
    2. Marc Audi & Fiaz Ahmad Sulehri & Amjad Ali & Razan Al-Masri, 2022. "An Event Based Analysis of Stock Return and Political Uncertainty in Pakistan: Revisited," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 39-56, September.
    3. Marc Audi & Amjad Ali, 2023. "Public Policy and Economic Misery Nexus: A Comparative Analysis of Developed and Developing World," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 56-73, May.
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    More about this item

    Keywords

    Average Tariff rate; Trade Tax Revenue; Expenditure Structure;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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