DETERMINANTS OF ECONOMIC GROWTH IN PAKISTAN: A STRUCTURAL VECTOR AUTO REGRESSION (SVAR) ANALYSIS

Muhammad Ajmair; Khadim Hussain; Faisal Azeem Abbassi; Zahra Masood Bhutta

doi:10.12955/ejbe.v12i2.1116

Muhammad Ajmair Mirpur University of Science and Technology
Khadim Hussain Mirpur University of Science and Technology
Faisal Azeem Abbassi Mirpur University of Science and Technology
Zahra Masood Bhutta National University of Modern Language

DOI: https://doi.org/10.12955/ejbe.v12i2.1116

Keywords: Structural Var, Remittances, Economic Growth, Grass National Expenditures, Inflation

Abstract

The study follows Structural Vector Auto Regression (SVAR) approach proposed by the so-called AB-model of Amisano and Giannini (1997) to find out relevant macroeconomic determinants of economic growth in Pakistan. Annual data is taken from World Development Indicators (CD-ROM, 2015) for the period 1976-2014. The widely-used Schwarz information criterion and Akaike information criterion is considered for the lag length in each estimated equation. Main findings of the study are that remittances received, gross national expenditures and inflation are found to be the best relevant positive and significant determinants of economic growth. Based on these empirical findings, we conclude that government should focus on overall economic growth augmenting factors while formulating any policy relevant to the concerned sector.

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