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Money, Monetization and Economic Growth in Pakistan

Author

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  • Muhammad Zia Ullah Khan

    (Superior University, Lahore, Pakistan)

  • Chaudhary Abdul Rahman

    (Superior University, Lahore, Pakistan)

Abstract

Purpose: It is observed and widely accepted theory among the economists; money plays significant role in determining economic growth of a country. Methodology: In this study; focus was on understanding the relationship between; money, monetization and economic growth of Pakistan. We based my study on endogenous growth theory; helps in empirical testing of Standard Growth Model consist of Dependent Variable; Gross Domestic Product (GDP) per capita and Independent Variables; Inflation, Income disparity, Investment, stock market price, money supply (M2). Auto Regressive Distributive Lag (ARDL) Approach is used to bind the testing to cointegration; which is used to check long equilibrium relationship between all variables in the model. And to check the short term relationship between money supply and economic growth; Error Correction Model is applied to the study. We use series data followed the range 1980-2012 for this study and results of cointegration show that, variables are co-integrated with a long term equilibrium relationship. Findings: We found that error correction term is negative and significant. Recommendations: This study open new directions for further research.

Suggested Citation

  • Muhammad Zia Ullah Khan & Chaudhary Abdul Rahman, 2015. "Money, Monetization and Economic Growth in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(3), pages 95-104, March.
    • Handle: RePEc:ijr:journl:v:3:y:2015:i:3:p:95-104
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    References listed on IDEAS

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    More about this item

    Keywords

    GDP; Inflation; Income disparity; Investment; Money supply (M 2); Stock market price;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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