IDEAS home Printed from https://ideas.repec.org/a/src/sbseec/v6y2024i3p495-508.html
   My bibliography  Save this article

Evidence of Monetary Policy and Economic Growth Nexus from Pakistan

Author

Listed:
  • Khan, Ghulam Yahya
  • Azad, Mehvish
  • Mehboob, Salik
  • Hashmi, Muhammad Saim

Abstract

Purpose: To analyze the relationship between monetary policy and economic growth in Pakistan, study had used time-series data from 1975 to 2023. &Design/Methodology/Approach: Employing an empirical approach, the study applies the Error Correction Model (ECM) and the Autoregressive Distributed Lag (ARDL) framework to investigate variable interactions. To capture volatility within growth-rate of GDP-per-capita (GDPPC), study further applies the “Auto Regressive Conditional Heteroscedasticity (ARCH) and Generalized Auto Regressive Conditional Heteroscedasticity (GARCH) models”.Findings: These results implied that inflation, money supply, and overall reserve-ratio exert a negative and significant impact on financial development, whereas monetary policy instruments, specifically interest rates and exchange rates, demonstrated a positive and significant effect on economic performance. Results from ARCH and GARCH analysis revealed a persistent long-run volatility effects in Pakistan’s GDPPC growth rate.Implications/Originality/Value: So, it is concluded that money supply policies can be revised and instead of increasing money supply solely, the focus can be shifted towards increasing interest-rate and exchange-rate which, in most cases, yield positive results while money supply, especially in this study, has negative sign pointing towards negative economic growth unsupportive for sustainable growth and development.

Suggested Citation

  • Khan, Ghulam Yahya & Azad, Mehvish & Mehboob, Salik & Hashmi, Muhammad Saim, 2024. "Evidence of Monetary Policy and Economic Growth Nexus from Pakistan," Sustainable Business and Society in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 6(3), pages 495-508, September.
    • Handle: RePEc:src:sbseec:v:6:y:2024:i:3:p:495-508
    DOI: http://doi.org/10.26710/sbsee.v6i3.3160
    as

    Download full text from publisher

    File URL: https://publishing.globalcsrc.org/ojs/index.php/sbsee/article/view/3160/1804
    Download Restriction: no
    File URL: https://libkey.io/http://doi.org/10.26710/sbsee.v6i3.3160?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:src:sbseec:v:6:y:2024:i:3:p:495-508. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr Rana Muhammad Adeel Farooq (email available below). General contact details of provider: https://edirc.repec.org/data/csrcmpk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.