Macroeconomic effects of fiscal policy in Pakistan: a disaggregate analysis

This study analyzes the macroeconomic effects of fiscal policy on macroeconomic variables in Pakistan. The study utilizes VAR framework and uses quarterly data of Pakistan from 1976Q1 to 2017Q4. The results showed that after an increase in government expenditures, private consumption and prices take three quarters to increase, while private investment follows the declining trend. Private consumption and interest rate are negatively related with taxes, while private investment and prices are positively related with taxes. Real GDP, private consumption and interest rate respond positively with an increase in developmental expenditure, public consumption and public investment. Private investment is negatively related with development expenditure, public consumption and public investment. An increase in direct tax as well as indirect tax leads to an increase in real GDP, private investment and interest rate, while private consumption takes three to five quarters to responds. Private investment and prices are positively related with non-tax revenue, while real GDP, private consumption and interest rate are negatively related. These results support the Keynesian view that government expenditure and taxes are useful tools to stimulate the economic activity, while crowding-out hypothesis holds in Pakistan as well. An active and efficient role of government is required for macroeconomic stability.     

Optimal portfolio and spending rules for endowment funds

Review of Quantitative Finance and Accounting - Prior studies show that investor learning about earnings-based return predictors from academic research erodes return predictability. However, the...     

Spatial patterns and economic contributions of mining and tourism in biodiversity hotspots: A case study in China

Mining activities and tourism are both growing fast in biodiversity intense areas globally. However, the dynamic and interactions between mining and tourism when they both occur in biodiversity hotspots, and how they together may impact the economy and environment in these biodiversity rich areas, remain unclear. This paper examined how the two industries interact in terms of their economic contributions and spatial patterns in a biodiversity hotspot, Yunnan, China. We used correlation analyses to measure the relationships between mining activities, tourism visits and local gross domestic productions. We also employed a distance-based technique to investigate the nature of any dependency between mining and tourism sites. Results showed that mining activities tend to be in relatively fluent areas while tourism tends to occur in less developed areas. Our results showed that the location of tourism and mining sites are likely to be close to one another but the two industries usually perform better economically when they are apart from each other. These findings can provide insights on how mining and tourism together may impact the economy and environment in biodiversity rich areas, and provide important information for managers and planners on balancing mining and tourism development in these areas.     

Measuring the effects of monetary policy in Pakistan: a factor-augmented vector autoregressive approach

This paper examines the effects of monetary policy on macroeconomic variables in Pakistan’s economy using a data-rich environment. We used the factor-augmented vector autoregressive (FAVAR) methodology, which contains 115 monthly variables for the period 1992:01 to 2010:12. We compared the results of VAR and FAVAR model and the results showed that FAVAR model explains the effects of monetary policy which are consistent with the theory and better than the VAR model. VAR model shows the existence of price puzzle and liquidity puzzle in Pakistan while FAVAR model did not provide any evidence of puzzles. Interest rate negatively influences prices, hence interest rate is a good instrument for controlling inflation in Pakistan but it takes a lag of 5 months. The transmission of monetary policy shock is faster in case of prices as compared to output in Pakistan. FAVAR model supports the effectiveness of interest rate channel in Pakistan.