TESTING THE VALIDITY OF WAGNER’S LAW IN PAKISTAN: AN APPLICATION OF ARDL COINTEGRATION TECHNIQUE

    This study examines the validity of Wagner’s law by employingthe ARDL cointegration technique for the period 1976 to 2013 inPakistan.This study also checks the causality between government expenditureand real gross domestic product (RGDP) by applying Engle Granger approach. The results show that the Wagner’s law holds in Pakistan. The other main determinants of expenditure are trade openness, exchange rate and financial development. ECM coefficient is negative and statistically significant showing that short run dynamics converge towards equilibrium. The results of causality depict that there is unidirectional causality that runs from growth to expenditure, and not from public expenditure to growth. The policy implications of these results are that the government should be careful about its spending in future because the continuous increase in publicexpenditure can lead to further worsening of the budget deficit

The Rural Non-Farm Economy and Poverty Alleviation in Tehsil Sillanwali, District Sargodha

Rural non-farm economic activities are getting wide spread recognition in most of the   developing countries due to increasing inability of farm sector to provide employment and reasonable livelihood to rural households. These activities are disaggregated into three groups (1) Farm based non-agricultural activities, (2) wage-employment, and (3) self-employment and the study estimates the logit models to know the factors to involve in such activities. The study also investigates the factors influencing income among the rural households in Tehsil Sillanwali, district Sargodha. The results indicate that the poor and households owning more animals have more chances to involve in first category, whereas the dependency ratio is inversely related with it.  Education, male to female ratio and household size are the significant determinant of the second type activities. Households owning capital assets have more chances to involve in the third type category. Whereas the results for income model depict that education; land-ownership and involvement in non-farm economic activities are found to be significant factors to affect the household income

An Exploration of the Finance -Growth Nexus: Long Run and Causality Evidences from Selected Countries of SAARC Region

The debate on direction of Granger causality between financial development and real sector growth has been growing issue since 1980’s. Researchers are fanatical to empirically discern long run and casual relationship for devising economic policies. This study empirically investigated the finance growth nexus and Causality in the selected countries of SAARC region (Pakistan, India, Nepal and Sri Lanka) using the yearly data set from 1975-2009. The study employed the variables of banking sector as a proxy to financial development. Results of Maddala & Wu and Kao co-integration tests confirm that long run relationship exists between the financial and real sector variables. Result of Causality shows that it runs from real sector growth to financial sector development through proxy of Ratio of Liquid Liabilities to GDP per capita, Ratio of Private Credit by Deposit Money Banks and Financial Institutions to GDP per capita, Ratio of Bank deposits to GDP per capita and Ratio of commercial bank assets to sum of commercial banks plus central bank assets in the SAARC region. Keywords:Financial Sector Development, Real Sector Growth, Panel Co-Integration, VECM, Granger Causality, SAARC regio

Poverty and Its Determinants in Pakistan: Evidence from Pslm 2010-11

This study estimates the poverty in terms of head count ratio, poverty gap and squared poverty gap by using the fresh available PSLM data for the year 2010-11 in Pakistan. This study also finds its economic determinants by estimating multiple OLS regression.The results show that the headcount ratio, poverty gap and squared poverty gap are statistically significant 15.06 %, 2.29 % and 0.55 %, respectively in Pakistan. All of the poverty estimates arestatistically significant almost double in rural areas as compared to urban areas. The comparisons of the poverty estimates of this year with the previous ones of2007-08 at urban, rural and nationallevel show that poverty decreased statistically significantly. Among the provinces it is the highest in Baluchistan and the lowest in Sindh. The comparison of provincial poverty estimates of this year with the same ones of previous year (2007-08) depict that poverty decreased in all of the provinces, but it is statistically significant only in case of Baluchistan.Further the resultsshow that Poverty has statistically significantinverse relationship with education. Households having animals for transportation, owning residential buildings, shops and commercial buildings and living in urban areas have less poverty than those who do not. But it hasstatistically significant positive association with the household size and dependency ratio. The household size is greater in poor families than the rich ones. As far as household head’s employment status, occupation and industry is concerned, it is highest in sharecroppers,elementary occupations, and community, social services. At a policy level, it is suggested that Govt. should focus more on education and generationof employment opportunities. Further it should provide loansto lower income groups on reduced rates for housing facilities andto start their own businesses like shops.Family planning should be encouraged especially in poor families.All such policies should focus more on rural areas of especially Baluchistan and KPK in Pakistan. Keywords: Poverty; Education; Animal for transportation; Household size;  Dependency ratio; Family planning; Residential building;Shops; Pakistan

Determinants of food Insecurity in Pakistan: Evidence from PSLM 2010-11

This study estimates the food insecurity using the first three measures of FGT and finds the factors responsible for it by estimating the logistic regression model for which the Pakistan Social and Living Standard Measurement (PSLM) survey data 2010-11 is used. The results show that food insecurity incidence is 28.63 per cent, whereas the food insecurity and squared food insecurity gaps are 5.28 per cent and 1.46 per cent, respectively. Results of the logistic regression model shows that it is negatively related to education, livestock, foreign remittance and female family heads, whereas it is positively related to poverty in Pakistan

Low Private Investment and Government Failure as the Binding Constraints to Pakistan’s Economy Growth Diagnostics Analysis

This research targets the most binding constraints in the economy of Pakistan during the period from 2007 to 2013 using Husmann-Rodrick-Vilasco (2005) decision tree. The growth diagnostics proves that the economy of Pakistan undergoes and passes from the stages of dilemma and huge economic complexities during this period. The economic growth of Pakistan is continuously being affected by structural problems including domestic energy crisis, low investment, high inflation, and security issues. Growth diagnostics points out to four major constraints to economic growth of Pakistan and these are: energy crisis, inadequate market development, poor performance of institutions, and lack of efficient public sector management. Only two of these constraints are explained in this study including low level of private investment and government failure. For policy implications, several areas like private sector growth, good governance, institutional strength, market development, macroeconomic stability, infrastructure development are important to make considerable reforms

An Empirical Analysis of Employment Status, Nature of Employment and Poverty Incidence in Pakistan

This study measured poverty incidence and decomposition of poverty incidence across employment status, industry /sectors of employment and occupation of employment in Pakistan. Impact of employment status and nature of employment of household head on household poverty incidence is also analysed by employing logistic regression technique. The study used Pakistan Social and Living Standard Measurement Survey (PSLM) data set for the year 2013-14 for empirical estimations. A class of Foster-Greer-Thorbecke (1984) method is employed to estimate poverty incidence as well as decomposition of poverty incidence. The results showed that poverty incidence is about 36 percent in Pakistan in year 2013-14. Poverty decomposition results depicted that poverty significantly varies across employment status, sectors/industry of employment and occupation of employment. Employers, electricity, gas & water industry and legislative, senior official & managers group have lowest poverty incidence while sharecropper & paid employee, construction sector and elementary occupations had highest poverty incidence. The results of Logit Model indicate that age of the household head, education of the household head and  general employment of the household head are inversely related to poverty while being male as head, residence of household in rural area, household size and dependency ratio are positively related to poverty incidence. Employment of the household head significantly reduces while dependency ratio immensely increases the odds of being in poverty. Therefore, sufficient employment opportunities should be provided to all for massive reduction in poverty and sustainable development of the country. Employment of the household head as share cropper, paid employed & livestock only, in construction, transport & storage sector, and in elementary occupations etc. have higher prospect of being in poverty. Thus, for fabulous reduction in poverty government should implement minimum wage policy and provide social safety nets to enhance the income of these poor workers to bring them out of poverty

Assessing the Determinants of Savings in Pakistan: An Evidence from PSLM 2010-11

The present study aims at investigating the determinants of the savings in Pakistan by using Pakistan Social and Living Standards Measurement (PSLM) survey data collected by Pakistan Bureau of Statistics (PBS) for the year 2010-11. The Multiple Regression Model is estimated for finding out the household saving determinants. The results reveal that savings have positive relationship with income, livestock, number of earner, while these are negatively related with education, gender of the household head and poverty in Pakistan. The regional level analysis reveals that marginal propensity to save is higher in rural areas as compared to urban counterpart. Among the provinces it is the highest in Punjab and lowest in Sindh. To promote savings among households in Pakistan, policies aiming at increasing income of the people should be formulated and implemented. Other policies include creation of job opportunities and provision of loan for livestock especially for the poor and females

Estimating the Role of Prices towards Poverty in Pakistan

This study investigates the effects of prices on poverty by applying the methodology of Son and Kakwani (2006) using the two data sets of Pakistan Living Standard Measurement Survey (PSLM) of 2007-08 and 2010-11 in Pakistan. The study calculates three poverty measures such as headcount ratio, poverty gap, and severity of poverty. The study also estimates the price elasticities of poverty for two commodities groups such as food and fuel. The study decomposes the price elasticity of poverty measures into two components; income component and distribution component. The study also estimates pro-poor price index (PPPI) for all the poverty measures. The results show that there in reduction in poverty from 16 % in 2007-08 to 12 % in 2010-11.  The results reveal that food price elasticity of poverty is greater than fuel price elasticity of poverty. The income as well as distribution components contribute to increase poverty, but income component contributes more than the redistribution one towards increase in poverty. The results also disclose that the increases in the prices of both commodities hurt the poor more than the non-poor. The increase in price of food commodities disturbs the poor more than the increase in prices of fuel commodities during 2007-08 and 2010-11. The government should compensate the poor and give some subsidies regarding food