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Poverty, inflation and economic growth: empirical evidence from Pakistan

Author

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  • Chani, Muhammad Irfan
  • Pervaiz, Zahid
  • Jan, Sajjad Ahmad
  • Ali, Amjad
  • Chaudhary, Amatul R.

Abstract

This study aims to investigate the role of economic growth and inflation in explaining the prevalence of poverty in Pakistan. ARDL bound testing approach to co-integration confirms the existence of long run relationship among the variables of poverty, economic growth, inflation, investment and trade openness over the period of 1972-2008. Empirical results show that economic growth and investment have negative and inflation has positive impact on poverty. The effect of trade openness on poverty is insignificant in this study. The short run analysis reveals that economic growth has negative and inflation has positive impact on poverty whereas the role of investment and trade openness in poverty reduction in short run is not significant.

Suggested Citation

  • Chani, Muhammad Irfan & Pervaiz, Zahid & Jan, Sajjad Ahmad & Ali, Amjad & Chaudhary, Amatul R., 2011. "Poverty, inflation and economic growth: empirical evidence from Pakistan," MPRA Paper 34290, University Library of Munich, Germany, revised 2011.
    • Handle: RePEc:pra:mprapa:34290
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    File URL: https://mpra.ub.uni-muenchen.de/34290/1/MPRA_paper_34290.pdf
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    References listed on IDEAS

    as
    1. Muhammad Irfan CHANI & Zahid PERVAIZ & Amatul R. CHAUDHARY, 2011. "Determination of Import Demand in Pakistan: The Role of Expenditure Components," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(8(561)), pages 93-110, August.
    2. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    3. Gylfason, Thorvaldur, 1998. "Output gains from economic stabilization," Journal of Development Economics, Elsevier, vol. 56(1), pages 81-96, June.
    4. Zahid Pervaiz & Amatul R. Chaudhary, 2015. "Social Cohesion and Economic Growth: An Empirical Investigation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 48(4), pages 369-381, December.
    5. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    6. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    7. David Dollar, 2005. "Globalization, Poverty, and Inequality since 1980," World Bank Research Observer, World Bank Group, vol. 20(2), pages 145-175.
    8. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
    9. Hunjra, Ahmed Imran & Azam, Muhammad & Niazi, Ghulam Shabbir Khan & Butt, Babar Zaheer & Rehman, Kashif-Ur- & Azam, Rauf i, 2010. "Risk and return relationship in stock market and commodity prices: a comprehensive study of Pakistani markets," MPRA Paper 40662, University Library of Munich, Germany.
    10. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    11. Agenor, Pierre-Richard & McDermott, C John & Prasad, Eswar S, 2000. "Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts," World Bank Economic Review, World Bank Group, vol. 14(2), pages 251-285, May.
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    Citations

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    Cited by:

    1. Niraj Prasad Koirala & Dhiroj Prasad Koirala, 2016. "Poverty and Inequality across the Nations: How Can Governments be Effective in Coping?," Economy, Asian Online Journal Publishing Group, vol. 3(1), pages 24-30.
    2. Younis, Fizza & Chaudhary, Aslam & Akbar, Muhammad, 2015. "Pattern of Development and Sustainable Economic Growth In Pakistan: A Descriptive Analysis," MPRA Paper 71473, University Library of Munich, Germany.
    3. Muhammad Chani & Sajjad Jan & Zahid Pervaiz & Amatul Chaudhary, 2014. "Human capital inequality and income inequality: testing for causality," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 149-156, January.
    4. Saqlain Latif Satti & Muhammad Shahid Hassan & Fozia Hayat & Sudharshan Reddy Paramati, 2016. "Economic Growth and Inflow of Remittances: Do They Combat Poverty in an Emerging Economy?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1119-1134, July.
    5. Mehboob Ul Hassan & Muhammad Waqas Khalid & Ashar Sultan Kayani, 2016. "Evaluating the Dilemma of Inflation, Poverty and Unemployment," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(2), pages 67-82, June.
    6. John Anyanwu, 2013. "Working Paper 181 - Determining the Correlates of Poverty for Inclusive Growth in Africa," Working Paper Series 979, African Development Bank.
    7. Chani, Muhammad Irfan & Hassan, Mahboob Ul & Shahid, Muhammad, 2012. "Human capital formation and economic development in Pakistan: an empirical analysis," MPRA Paper 38925, University Library of Munich, Germany.
    8. Nazir, Sidra & Saeed, Saira & Muhammad, Atta, 2017. "Threshold Modeling for Inflation and GDP Growth," MPRA Paper 79649, University Library of Munich, Germany.
    9. Jan, Sajjad Ahmad & Chani, Muhammad Irfan & Pervaiz, Zahid & Chaudhary, Amatul R., 2012. "Physical infrastructure and economic development in Pakistan," MPRA Paper 37785, University Library of Munich, Germany.
    10. Akhsyim Afandi & Dwi Wahyuni & Jaka Sriyana, 2017. "Policies to Eliminate Poverty Rate in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 435-441.
    11. Zaman, Khalid & Khilji, Bashir Ahmad, 2013. "The relationship between growth–inequality–poverty triangle and pro-poor growth policies in Pakistan: The twin disappointments," Economic Modelling, Elsevier, vol. 30(C), pages 375-393.

    More about this item

    Keywords

    Poverty; Inflation; Economic Grovvth; Pakistan; Macroeconomic Policy; Welfare; Trade Openness;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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