The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan

Abstract. It is an established fact that there is strong association between investment and economic growth of a country but no such direct consensus had been developed on the type of investment. i.e. what are the different sectors in which investment has led to long term impact and did contributed to the growth. The current study in this regard will focus on investigating the relationship of Public Sector Development Programme (PSDP), Foreign Direct Investment (FDI) and Private Investment with the growth. The study will use data from 1980-81 to 2015-16 in this regard and employ Johansen cointegration to investigate the long run relationship. It is found that with foreign direct investment, health expenditure and transport and communication expenditure has negative relationship in the long run. Where as private investment, education expenditure and expenditure on housing has positive relationship with growth. Based on these findings recommendations were totally investment centric with primary focus on reduction in taxes and other barriers to bring in more investment in long run. Beside taxation, recommendations were made on administrative balance both in tax system and public sectors which were made part of provincial domain after 18th amendment.Keywords. Public sector development programme, Foreign direct investment, Private investment.JEL. D92, O40, H51, H52

Oil Prices and Exchange Rate with Impact of Pre-Dollar and Post-Dollar Regime Dummies

This study explains the relationship between oil prices and exchange rate of Pakistan in the time when Pakistan didn’t adopt for dollar and when Pakistan adopted for dollar as standard currency. By following the approach used by (Meese and Rogoff, 1988) and (Throop,1993) Interest Rate Parity has been used to construct a model by using exchange rate of Pakistan, Dubai crude oil price and interest rate differential from period of 1970m-1 to 2017m05. Results of the analysis shows that all variable are found to be integrated at level after application of Bealieu and Miron Seasonal Unit Root test. Results of the relationship between oil prices and exchange rate show that oil price is impacting exchange rate positively, while interest rate differential is negatively influencing the exchange rate. While examining the results for impact of change in regime on exchange rate, structural shifts were prominent during managed floating regime and floating regime which were causing Changes in the exchange rate policies

Oil Prices and Exchange Rate with Impact of Pre-Dollar and Post-Dollar Regime Dummies

This study explains the relationship between oil prices and exchange rate of Pakistan in the time when Pakistan didn’t adopt for dollar and when Pakistan adopted for dollar as standard currency. By following the approach used by (Meese and Rogoff, 1988) and (Throop,1993) Interest Rate Parity has been used to construct a model by using exchange rate of Pakistan, Dubai crude oil price and interest rate differential from period of 1970m-1 to 2017m05. Results of the analysis shows that all variable are found to be integrated at level after application of Bealieu and Miron Seasonal Unit Root test. Results of the relationship between oil prices and exchange rate show that oil price is impacting exchange rate positively, while interest rate differential is negatively influencing the exchange rate. While examining the results for impact of change in regime on exchange rate, structural shifts were prominent during managed floating regime and floating regime which were causing Changes in the exchange rate policies

The Effect of Oil Prices and Regime Switches on Real Effective Exchange Rate in Pakistan: A Markov Regime Switching Approach

This study takes into the account relationship between oil prices and real effective exchange rate by using different exchange rate regimes in Pakistan. In this study following (Meese and Rogoff, 1988) and (Throop,1993) Interest Rate Parity has been used to construct a model by using real effective exchange rate, Dubai crude oil price and interest rate differential from period of 1970m01 to 2014m03. Through examining the results all variables are found to be integrated of order one. The long run relationship has been examined between real effective exchange rate and Dubai crude oil price in case of all exchange rate regimes with the use of regime dummies and interaction terms except for no regime, two-tier exchange rate regime and unified exchange rate regime. Similarly between real effective exchange rate and interest rate differential long run relationship has been examined in all the exchange rate regimes. Long run and dynamic result has also been detected except for interest rate differential with the use of exogenous exchange rate regime dummies. Oil price impacting exchange rate positively in both long and short run, while interest rate differential negatively effects exchange rate in long run. Through examining the results for impact of exchange rate regime switching on exchange rate, during 1970-2000 structural shifts were causing the change in exchange rate regimes with depreciation being high during this period

The Effect of Oil Prices and Regime Switches On Real Effective Exchange Rate in Pakistan: A Markov Regime Switching Approach

Abstract. This study takes into the account relationship between oil prices and real effective exchange rate by using different exchange rate regimes in Pakistan. In this study following (Meese & Rogoff, 1988) and (Throop,1993) Interest Rate Parity has been used to construct a model by using real effective exchange rate, Dubai crude oil price and interest rate differential from period of 1970m01 to 2014m03. Through examining the results all variables are found to be integrated of order one. The long run relationship has been examined between real effective exchange rate and Dubai crude oil price in case of all exchange rate regimes with the use of regime dummies and interaction terms except for no regime, two-tier exchange rate regime and unified exchange rate regime. Similarly between real effective exchange rate and interest rate differential long run relationship has been examined in all the exchange rate regimes. Long run and dynamic result has also been detected except for interest rate differential with the use of exogenous exchange rate regime dummies. Oil price impacting exchange rate positively in both long and short run, while interest rate differential negatively effects exchange rate in long run. Through examining the results for impact of exchange rate regime switching on exchange rate, during 1970-2000 structural shifts were causing the change in exchange rate regimes with depreciation being high during this period.Keywords. Interest rate parity, Exchange rate regime, Regime switching, Structural shift and Dubai crude oil price.JEL. E42, E43, F31

The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan

It is an established fact that there is strong association between investment and economic growth of a country but no such direct consensus had been developed on the type of investment .i.e. what are the different sectors in which investment has led to long term impact and did contributed to the growth. The current study in this regard will focus on investigating the relationship of Public Sector Development Programme (PSDP), Foreign Direct Investment (FDI) and Private Investment with the growth. The study will use data from 1980-81 to 2015-16 in this regard and employ Johansen cointegration to investigate the long run relationship. It is found that with foreign direct investment, health expenditure and transport and communication expenditure has negative relationship in the long run. Where as private investment, education expenditure and expenditure on housing has positive relationship with growth. Based on these findings recommendations were totally investment centric with primary focus on reduction in taxes and other barriers to bring in more investment in long run. Beside taxation, recommendations were made on administrative balance both in tax system and public sectors which were made part of provincial domain after 18th amendment

Oil Prices and REER with Impact of Regime Dummies

This study is basically explores the long run relationship between REER, IRD and Oil Prices, with the use of dummies and interaction terms for exchange rate regimes in Pakistan. By using Hatemi – J residual based cointegration test. Test has modified by including level shift, level shift with trend and regime shift. The data span is from the period of 1982m01-2014m03 in case of Pakistan. Also negative relationship between IRD and REER is due to indirect relationship between inflation and nominal interest rate that leads to fall in exchange rate. Long run relationship has concluded from cointegration test between variables

Oil Prices and REER with Impact of Regime Dummies

Abstract. This study is basically explores the long run relationship between REER, IRD and Oil Prices,  with the use of dummies and interaction terms for exchange rate regimes in Pakistan. By using Hatemi – J residual based cointegration test. Test has modified by including level shift, level shift with trend and regime shift. The data span is from the period of 1982m01-2014m03 in case of Pakistan. Also negative relationship betweenIRD and REER is due to indirect relationship between inflation and nominal interest rate that leads to fall in exchange rate. Long run relationship has concluded from cointegration test between variables.Keywords.Hatemi-J residual based cointegration, Cointegration test, Level Shift, Regime Shift and Interaction terms.JEL. N70, O13, P28

Oil Prices and REER with Impact of Regime Dummies

This study is basically explores the long run relationship between REER, IRD and Oil Prices, with the use of dummies and interaction terms for exchange rate regimes in Pakistan. By using Hatemi – J residual based cointegration test. Test has modified by including level shift, level shift with trend and regime shift. The data span is from the period of 1982m01-2014m03 in case of Pakistan. Also negative relationship between IRD and REER is due to indirect relationship between inflation and nominal interest rate that leads to fall in exchange rate. Long run relationship has concluded from cointegration test between variables

The Effect of Oil Prices and Regime Switches on Real Effective Exchange Rate in Pakistan: A Markov Regime Switching Approach

This study takes into the account relationship between oil prices and real effective exchange rate by using different exchange rate regimes in Pakistan. In this study following (Meese and Rogoff, 1988) and (Throop,1993) Interest Rate Parity has been used to construct a model by using real effective exchange rate, Dubai crude oil price and interest rate differential from period of 1970m01 to 2014m03. Through examining the results all variables are found to be integrated of order one. The long run relationship has been examined between real effective exchange rate and Dubai crude oil price in case of all exchange rate regimes with the use of regime dummies and interaction terms except for no regime, two-tier exchange rate regime and unified exchange rate regime. Similarly between real effective exchange rate and interest rate differential long run relationship has been examined in all the exchange rate regimes. Long run and dynamic result has also been detected except for interest rate differential with the use of exogenous exchange rate regime dummies. Oil price impacting exchange rate positively in both long and short run, while interest rate differential negatively effects exchange rate in long run. Through examining the results for impact of exchange rate regime switching on exchange rate, during 1970-2000 structural shifts were causing the change in exchange rate regimes with depreciation being high during this period