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Trade,Financial and Growth Nexus in Pakistan

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  • Arshad Khan, Muhammad
  • Qayyum, Abdul

Abstract

This paper empirically investigates the impact of trade and financial liberalization on economic growth in Pakistan using annual observations over the period 1961-2005. The analysis is based on the bound testing approach of cointegration advanced by Pesaran et al (2001). The empirical findings suggest that both trade and financial liberalization policies play an important role in nhancing economic growth in Pakistan in the long-run. However, the short-run responses of real deposit rate and trade policy variables are very low, suggesting further acceleration of reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated equation remains stable over the period of study as indicated by CUSUM and CUSUMQ stability tests.

Suggested Citation

  • Arshad Khan, Muhammad & Qayyum, Abdul, 2007. "Trade,Financial and Growth Nexus in Pakistan," MPRA Paper 6523, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6523
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alia, Didier & Chassem Tchatchum, Nacisse Palissy, 2009. "Commerce, finance et croissance économique au Cameroun
      [Commerce, finance and economics growth in Cameroun]
      ," MPRA Paper 17737, University Library of Munich, Germany.
    2. Rashid Amjad Chaudhry & Musleh ud Din & Abdul Qayyum, 2011. "Pakistan: Breaking Out of Stagflation into Sustained Growth," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 13-30, September.
    3. repec:dug:actaec:y:2017:i:3:p:39-55 is not listed on IDEAS
    4. Zaman, Khalid & Izhar, Zeeshan & Khan, Muhammad Mushtaq & Ahmad, Mehboob, 2012. "The relationship between financial indicators and human development in Pakistan," Economic Modelling, Elsevier, vol. 29(5), pages 1515-1523.
    5. Ahad, Muhammad & Dar, Adeel Ahmad & Imran, Muhammad, 2017. "Does Financial Development Promote Industrial Production in Pakistan? Evidence from Combine Cointegration and Causality Approach," MPRA Paper 76458, University Library of Munich, Germany.
    6. Ghulam Akhmat & Khalid Zaman & Tan Shukui, 2014. "Impact of financial development on SAARC’S human development," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2801-2816, September.
    7. Qayyum, Abdul, 2008. "Does Monetary Policy Play Effective Role in Controlling Inflation in Pakistan," MPRA Paper 13080, University Library of Munich, Germany.
    8. Mwinlaaru, Peter Yeltulme & Ofori, Isaac Kwesi, 2017. "Real exchange rate and economic growth in Ghana," MPRA Paper 82405, University Library of Munich, Germany.
    9. Ijaz Rehman & Muhammad Shahbaz, 2014. "Multivariate-based Granger causality between financial deepening and poverty: the case of Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(6), pages 3221-3241, November.

    More about this item

    Keywords

    Trade Liberalization; Financial Development; Economic Growth; Bound Test;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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