Impact of Budget Deficit on Economic Growth of Pakistan (An Empirical Analysis)

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Ghulam Mustafa
Ihsan Ur Rehman Ghauri

Abstract

Keeping in view the everlasting influence of macroeconomic
planning and management on economic growth and development,
this study aims to address the effect of fiscal policy and budget
deficit upon economic growth. Fiscal policy is a critical aspect of
macroeconomic framework. For underpinning the empirical
evidences ARDL approach is utilized for efficient and consistent
upshots. Secondly, time series data from 1979 to 2013 is used
for this study. Results clarify that fiscal shortage influences
economic growth and development of nation antagonistically.
There exists negative and noteworthy connection between
spending shortfall and economic growth both in long run and
short run. Exchange rate has negative relationship on fiscal
development of Pakistan. Urbanization is significant and positive
determinant of economic growth (GDP).

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