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Estimating the Long-Run Creditworthiness of Pakistan

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  • KARIM HASHMI, RIMSHA
  • QAYYUM, ABDUL

Abstract

The paper analyses the long-run creditworthiness of Pakistan. The analysis is conducted on time series data of the years 1972-2013. Two Probit Models are estimated by Maximum Likelihood Method. Three specifications of Probit Model of long-run creditworthiness of Pakistan are estimated. These alternative specifications are due to measurement of expected net capital inflows/GDP ratio. It is found that with the inclusion of lagged net capital inflows/GDP ratio in the first Probit Model, the DS/GDP ratio and INV/GDP ratio are found to be significantly impacting the long-run creditworthiness of Pakistan. In the second Probit Model, when POP/GDP ratio is included as an alternate to INV/GDP ratio, the two alternative specifications for expected net capital inflows/GDP ratio mainly the current values of net capital inflows/GDP ratio and the lagged values of net capital inflows/GDP ratio, DS/GDP ratio and POP/GDP ratio all significantly impact the long-run creditworthiness of Pakistan.

Suggested Citation

  • Karim Hashmi, Rimsha & Qayyum, Abdul, 2016. "Estimating the Long-Run Creditworthiness of Pakistan," MPRA Paper 85553, University Library of Munich, Germany, revised 2017.
    • Handle: RePEc:pra:mprapa:85553
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    References listed on IDEAS

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E0 - Macroeconomics and Monetary Economics - - General

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