What lies behind fiscal deficit
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Date
2013
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Transylvanian Review of Administrative Sciences
Abstract
The article aims to investigate some of the
important factors contributing to the fiscal deficit
in Pakistan for the period of 1976 to 2010. International
trade, economic growth, total debt
servicing and broad money supply are considered
as foremost factors affecting fiscal deficit in
Pakistan. The empirical findings reveal that only
economic growth has an insignificant impact on
fiscal deficit in the long run but has significant
impact in the short run. Whereas, all other factors
such as international trade, total debt servicing
and broad money supply affect fiscal deficit
significantly in both short run as well as in the
long run.
Moreover, it is found that there exists univariate
Granger causality which runs from economic
growth to fiscal deficit, from total debt servicing
to fiscal deficit, and there exists bivariate causality
between money supply and fiscal deficit in
the short run. Also, in the long run all the factors
Granger cause to fiscal deficit. The study has
also found the existence of joint causality among fiscal deficit, trade, economic growth, total debt
servicing and money supply
Description
Keywords
Pakistan, Fiscal Deficit, Economic Growth, Total Debt Servicing, International Trade Broad Money Supply
Citation
Kalim, R., & Hassan, M. S. (2013). WHAT LIES BEHIND FISCAL DEFICIT: A CASE OF PAKISTAN. Transylvanian Review of Administrative Sciences.