Tax Revenue, Stock Market and Economic Growth of Pakistan

Structured Abstract: Purpose – The purpose of this paper is to examine the effects of capital market and fiscal policy influences in determining the nexus of economic growth in Pakistan from July 2003 to July 2012. Design/methodology/approach – The authors utilise ADF unit root test, Johansen Cointegration test, VECM test, Granger causality test and variance decomposition analysis to test the relationship among tax revenue, stock market and economic growth in Pakistan. Granger causality analysis is used to answer questions whether “Does tax revenue cause the economic growth?” or “Does tax revenue cause the capital market?”. Findings – The results demonstrate that there is a bidirectional casualty between tax revenue and economic growth; and a unidirectional causality from capital market to tax revenue. The estimated result shows that growth of Pakistan economy is strongly contributed from the high collection of direct tax revenue and the development of financial market activity. Originality/value – The findings of this paper have important implications to current and potential investors in Pakistan economy to understand the economic condition of Pakistan and to assist them in making their investment decision.&nbsp

The relationship between macroeconomic volatility and the stock market volatility: Empirical evidence from Pakistan

The relationships among the macroeconomic variables and stock returns analyzed in both the developed and developing countries, but are not well estimated in Pakistan. The current study explores the time series as analysis of economic variables and stock market by applying the Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH). The macroeconomic variables include interest rate, inflation, and gross domestic product. For representation of stock market, Karachi Stock Exchange (KSE-100 Index) is taken as test market. The monthly data of the variables for the time period from December 1991 to August 2012 is used for the current study analysis. The ADF and ARCH tests are used to check the stationarity and homoskedasticity in the data respectively. The results show that macroeconomic variables have substantial influence on the stock prices. The stock prices have much impact on the economy of the country, and are consider as the best indicators for future prediction of the market and economy as well. Furthermore, the stock market in Pakistan is highly volatile the regulatory bodies must pay attention to make it less volatile

The Decomposition Analysis of CO2 Emission and Economic Growth in Pakistan India and China

The conflict between economic growth and keeping greenhouse gases (GHG) at controllable levels is one of the ultimate challenges of this century. The aim of Kyoto Protocol is to keep the level of carbon dioxide (CO2) below a certain threshold level. The purpose of this paper is to study the effect of CO2 emission on economic growth by conducting the regional analysis of PIC nations i.e. Pakistan, India and China. The study also provides the detail information regarding the atmospheric emission by applying decomposition analysis. It is suggested that environmental policies need more attention in the region by keeping the differences aside. So, the emission trading is considered to be the new concept. The approach should be introduced to tackle down the global warming in the region. Now it is time to respond because the low Carbon Economy is the reality

136 Tax Revenue, Stock Market and Economic Growth of Pakistan

The purpose of this paper is to examine the effects of capital market and fiscal policy influences in determining the nexus of economic growth in Pakistan from July 2003 to July 2012. The authors utilize ADF unit root test, Johansen Cointegration test, VECM test, Granger causality test and variance decomposition analysis to test the relationship among tax revenue, stock market and economic growth in Pakistan. Granger causality analysis is used to answer questions whether “Does tax revenue cause the economic growth?” or “Does tax revenue cause the capital market?”. The results demonstrate that there is a bidirectional casualty between tax revenue and economic growth; and a unidirectional causality from capital market to tax revenue. The estimated result shows that growth of Pakistan economy is strongly contributed from the high collection of direct tax revenue and the development of financial market activity. The findings of this paper have important implications to current and potential investors in Pakistan economy to understand the economic condition of Pakistan and to assist them in making their investment decision

Application Of Simple And Dimson Market Models: The Case Of The Karachi Stock Exchange

ABSTRACT Karachi Stock Exchange is one of the emerging stock markets of Asia. Unlike the developed equity markets, the emerging markets have thin trading, market overreaction, highly market volatility and lead or lag structure, which are the main reasons of the several forms of model misspecification. The current study investigates whether or not Dimson market model explains better stock behavior rather than the simple market model from the investor's point of view. Both the models are employed on the monthly data of all the sectors which are listed in KSE by using OLS and GARCH-M estimation methods for analysis. The paper concludes that simple market model is more acceptable model in many sectors of KSE than Dimson market model. The limitation of the study is that how large data is used and either all sectors or some specific sectors be taken into consideration for estimation. The future research should consider the KSE-30 and KSE-100 listed firms for estimation along with the increase in the time period