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BUDGET DEFICIT AND INFLATION EMPIRICAL EVIDENCE FROM PAKISTAN

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12 Pages : 130-141

http://dx.doi.org/10.31703/gmsr.2021(VI-I).12      10.31703/gmsr.2021(VI-I).12      Published : Mar 2021

Budget Deficit and Inflation: Empirical Evidence from Pakistan

Abstract

    This paper is focused on investigating the deficit-inflation model for the purpose of analyzing the impact of fiscal deficit on inflation in Pakistan within the framework of ARDL bounds testing approach to co integration. Order of integration and the issue of unit root was diagnosed with the help of ADF and PP tests of stationary. Error Correction Model and Granger Causality test are used for investigating the speed of adjustment and pattern of causality among the targeted variables. Findings reveal that impact of fiscal deficit is inflationary as it helps in boosting the inflation rate in Pakistan. The pattern of causality was diagnosed to be of one-way, running from fiscal imbalances to inflation. Findings propose that government should concentrate on countering the budget deficit by promoting economic growth through utilization of fiscal policies like reduction in public spending and expanding the tax revenue.

    Budget Deficit, Inflation, ARDL, Pakistan

    (1) Minhajuddin
    Assistant Professor, Department of Economics, Faculty of Business % Economics, Abdul Wali Khan University Mardan, KP, Pakistan.
    (2) Masud Ahmad
    MPhil Scholar, Department of Economics, Qurtuba University of Science % Information Technology, Peshawar Campus, KP, Pakistan.
    (3) Muhammad Sohail Alam Khan
    Lecturer, Department of Economics, Faculty of Business % Economics, Abdul Wali Khan University Mardan, KP, Pakistan.
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Cite this article

APA

    APA : Minhajuddin., Ahmad, M., & Khan, M. S. A. (2021). Budget Deficit and Inflation: Empirical Evidence from Pakistan. Global Management Sciences Review, VI(I), 130-141. https://doi.org/10.31703/gmsr.2021(VI-I).12

CHICAGO

    CHICAGO : Minhajuddin, , Masud Ahmad, and Muhammad Sohail Alam Khan. 2021. "Budget Deficit and Inflation: Empirical Evidence from Pakistan." Global Management Sciences Review, VI (I): 130-141 doi: 10.31703/gmsr.2021(VI-I).12

HARVARD

    HARVARD : MINHAJUDDIN., AHMAD, M. & KHAN, M. S. A. 2021. Budget Deficit and Inflation: Empirical Evidence from Pakistan. Global Management Sciences Review, VI, 130-141.

MHRA

    MHRA : Minhajuddin, , Masud Ahmad, and Muhammad Sohail Alam Khan. 2021. "Budget Deficit and Inflation: Empirical Evidence from Pakistan." Global Management Sciences Review, VI: 130-141

MLA

    MLA : Minhajuddin, , Masud Ahmad, and Muhammad Sohail Alam Khan. "Budget Deficit and Inflation: Empirical Evidence from Pakistan." Global Management Sciences Review, VI.I (2021): 130-141 Print.

OXFORD

    OXFORD : Minhajuddin, , Ahmad, Masud, and Khan, Muhammad Sohail Alam (2021), "Budget Deficit and Inflation: Empirical Evidence from Pakistan", Global Management Sciences Review, VI (I), 130-141

TURABIAN

    TURABIAN : Minhajuddin, , Masud Ahmad, and Muhammad Sohail Alam Khan. "Budget Deficit and Inflation: Empirical Evidence from Pakistan." Global Management Sciences Review VI, no. I (2021): 130-141. https://doi.org/10.31703/gmsr.2021(VI-I).12