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Effects of Demograhic and Macroeconomic Variables on Housing Demand in Pakistan Housing is the most important and durable asset for any household. It is an essential need of humans. Housing demand is derived demand from leisure demand. The main objective of this study is to investigate the effect of demographic and macroeconomic variables on housing demand in case study of Pakistan. For this purpose, study uses time series data from 1980 to 2019. This study uses housing demand as a dependent variable and three age brackets for demographics variables (Agebracket1, Agebracket2 and Agebracket3), per capita real GDP, male unemployment rate and inflation rate are used as independent variables. As study uses time series data, so checking the stationarity for all variables through unit root tests is a prerequisite condition for robust findings and PP tests of unit root are applied and result shows a mixed order of integration of variables. On the basis of unit roots tests, study estimates the model through ARDL bound testing approach of cointegration. In the short run Agebracket1, Agebracket3, male unemployment rate and inflation rate have positive effects on housing demand. While real GDP per capita and Agebracket2 have negative impacts on housing demand. It is because in short run the positive effect of income is not properly channelized in the form of demand for durable goods. In the long run Agebracket1, Agebracket3, real GDP per capita, male unemployment rate and inflation rate shows significant impact on housing demand. The Agebracket2 and inflation rate shows negative impact on housing demand but the agebracket2 is not statically significant. Lastly, CUSUM and CUSUMSQ are also used to confirm the stability. The government should provide the facilities in form of inflation control, job opportunities, and cheap credit facilities to boost the housing demand. It is because at macro level housing demand matters for sustainable growth of economy. Keywords: Housing Demand (HD), Demographics Factors, ARDL, ECM, ADF, PP.
Economic Effects of Oil and Global food Prices Shocks on Macroeconomic Variables in Pakistan Effect of fluctuation in oil price and global food price on macroeconomic variables is namely called oil and food price shock these fluctuations may include upward or downward movement in oil and food prices which are suggested by economic theory. These shocks are the main cause of policy vagueness and ambiguity in the economy. The spread of oil price shock and the association between these shocks and economic performance of a country give useful understanding to the policy makers regarding the fiscal and monetary policy. This study observe the transmission channels by which world crude oil and food price shocks disturbs the movements of carefully chosen macroeconomic variables which includes inflation rate, call money rate (as a proxy of interest rate), real effective exchange rate, stock price index, economic growth and quantum of industrial export for Pakistan economy by using quarterly data over the period of 1990 Q1 to 2018 Q4. A realistic and empirical analysis is supported by employing structural vector autoregressive model. To track the impact of world crude oil and food price shocks to Pakistan economy we employed Impulse response analysis and Forecast variance decomposition. Results reveals that world crude oil price shock has, negative impact on economic growth and real effective exchange rate, positive impact on inflation and call money rate. On the other way following world food price shock stock market do not have noticeable effect and call money rate and inflation have positive impact of shock. However the variation in call money rate are higher in presence of world oil price shock in comparison of food price. Forecast error Variance decomposition discloses that real effective exchange rate is most important base of deviation and instabilities in case of world crude oil price shock. On the other hand among all, we can say that real effective exchange rate is a main cause of deviations in Pakistan. This infers that supply and demand side instabilities initiated and originated by the external/exterior shocks which are the main cause of inflation and unemployment in Pakistan. To avoid these damaging affects to Pakistan’s economy we need to search a path towards self-reliance in case of food and government should take the steps to maintain and achieve food security. Furthermore we needs to address the excess demand of oil by using other means of transportation and diversify our industrial sector in such manner that we produce high quality products by using other substitute as energy source instead of crude oil. By exploring the natural resources and crude oil within the country balance of payment can recover its deficit and foreign dependence will also be condensed.
Higher Education and Unemployment NEXUS: A Case Study of Pakistan Unemployment is burning issue not only in case of developing countries but in case of developed countries also. There is large literature on unemployment both on international and national level. But this study is different as it has checked nexus between unemployment rate and higher education. Current study is based on the annual time series data over the phase of 1985 to 2018. This study applies Johansen Co-integration, Granger Causality to analyze the long run relation and measuring the causality of the policy variables. The Error correction model has also been used to check short run association among variables and adjustment of variables in short in case of fluctuations. The five equations were found Co-integrated by applying Johansen Co-integration and error term was reported as 3% which explains the annual adjustment speed in case of disequilibrium. Whereas in second model, four equation are reported to be co-integrated and ECM reflects 13 percent speed of yearly adjustment when any disequilibrium takes place in short run. The findings of Granger Causality elucidates strong nexus between the unemployment and higher education. Therefore, it is strongly recommended to have a rigorous bridging between higher education institution and corporate sector to avoid potential threat of unemployment in country.
Financial Stress and Household Behavior: A Case Study of Rawalpindi, Pakistan Human economic decisions depend upon their preferences and motives which optimize their satisfaction level and lead their lives to a better end. Households take prime decisions about Consumption and saving. These decisions are affected by different demographic, social and economic factors. This study, tries to explore beahvioural factors which affect human decisions by using primary data of 243 households belonging to salaried class. Financial stress is the key variable which distort the economic decision about saving. Impulsive behaviour, consumer loan, consumer financing instruments, pro-consumptive behaviour, family financial support and domestic externalities are the factors which cause financial stress among households of salaried class. The descriptive analysis shows all variables have significant role in determining of financial stress while ordered logit estimations shows that consumer loan, pro-consumptive behaviour and family financial support are statistically significant factors. 63 % of respondents show impulsive behaviour when something likes or listen about promotions. 66 % of respondents agree that consumer loan makes life worse while 69 % of respondents reports that they feel anxiety when they avail any type of loan, which is a vital symptoms of financial stress. 28 % of respondents feel distress after using Consumer financing instruments of respondents such instruments. 47 % of respondents report that they become fed up by making regular payments while 48 % of respondents are of view that pro-consumption leads to distress. Family financial support is negatively correlate with financial stress as 72 % of respondents verify this fact that increase the family financial support decrease the level of depression among households. 75 % of respondents report that demonstration effect distort the consumption pattern which further leads to early utilization of financial resources which further leads to financial stress. The marginal effects of accepted region (i.e. agree & strongly agree) shows that significant variables have role in determination of financial stress. Consumer loan has 7.5 % while family financial support has 3.8 % and domestic externalities has 4.3 % impact in determination of financial stress. Marginal effects of OLOGIT saving model in accepted region shows that consumer loan has 3.5 % while pro-consumptive behaviour has 3.6 % and domestic externalities has 1.9 % impact in determination of saving behaviours. The financial stress OLOGIT model concludes that consumer loan and domestic externalities have positive impact on financial stress whereas family financial support has negative impact. The saving OLOGIT model concludes that consumer loan, pro-consumptive behaviour and domestic externalities have negative impact on saving behaviour of salaried class.
IMPACT OF SANITARY AND PHYTO-SANITARY MEASURES ON TRADE OF PAKISTAN WITH EUROPEAN AND NORTH AMERICAN COUNTRIES. SPS measures have a very important role in bilateral exports. Non-tariff barriers are playing a major role in Pakistan's bilateral trade with both developed and developing countries, but they both have a promoting and a restricting impact. Other macroeconomic factors, such as trade partners' GDP and tariffs, have a substantial but negative impact on Pakistan's exports. Yet this study highlights the impact of SPS in addition to tariff and other macroeconomic variables on Pakistan agriculture exports to European Union and North American countries from 2003 to 2018. This study makes use of macroeconomic variables such as exports, Pakistan's GDP, and trade partners’ GDP and these variables are used to carry out estimations of model. SPS, tariffs and exchange rates are used as variables and were calculated using panel data at the HS 2 digit code level. The descriptive analysis between SPS and other macroeconomic variables on Pakistan agriculture exports to European Union and North American countries shows that Pakistan agriculture exports have trade restrictive effects. Panel data is used in this study by using some famous techniques, such as Sarjan j test and Panel unit root test. Thereafter, Housman test is used to seek favorable results. According to Housman test, random effect model is better than fixed effect model by rejecting the alternative hypothesis. There is some issue of endogeniety, therefore we used generalized method of moment which is developed by Arellano and bound in 1991. It shows the negative and statistically significant impact of SPS and tariff on Pakistan agriculture exports to European Union and North American countries. The proximate reason behind negative and significant impact is that partner countries have imposed cumulative sanitary and phytosanitary measures on Pakistan’s export because the country fails to fulfill the SPS requirements. In order to increase exports, Pakistan’s relevant ministries and institutions may improve trade policies and programs across all sectors. Keywords: Sanitary and Phytosanitary, World Trade Organization, Tariff, Pakistan, European Union, North America.
ROLE OF WOMEN ENTREPRENEURS IN ECONOMIC DEVELOPMENT OF DISTRICT CHITRAL (PAKISTAN) Title: Role of Women Entrepreneurs in Economic Development of District Chitral (Pakistan) The contribution of women entrepreneurs is still invisible and needs to be properly investigated. The purpose of this research is to investigate this relationship by measuring role of women entrepreneurship in economic development of their household. The word “women” refers to specific gender therefore this study mainly focused on the gender perspective for this purpose, primary data is collected from female entrepreneurs of different areas of Chitral KPK. Questionnaire based on 33 question is distributed among the women entrepreneurs. The research is both qualitative and quantitative as the data is collected through face-to-face interviews, telephonic interviews and survey forms distributed by a third party. Structured equation modeling is done to check the effect of independent variables on the main dependent variable ‘household development’. The results explained the significant impact of women entrepreneurship on the economic development of their households from generating income for their families to improving the living standards of their households. It was observed that women participation in entrepreneurial activities not only supports to their family income but also plays a significant role in households’ economic development and social well-being of the society. The strongest impact of gender biasness on women entrepreneurship was also observed, which means that gender biasness effects the women’s entrepreneurial activities in the areas like Chitral and there is a significant need to do more research and make new policies to resolve the issue. There is no information about the actual contribution of these female entrepreneurs towards their households, this study uniquely addresses the role of women entrepreneurs in development of their households which is still an unseen but a powerful benefactor of development process. Based on the findings of the study government and other organizations must make new and mixed policies for the entrepreneurship development focusing mainly on the gender gap or biasness that effects the entrepreneurial activities of women in rural areas of Pakistan.
Trade Policy Institutions and Economic Growth Nexus: A Panel Data Analysis of Selected Asian Countries This study has tried to analyze how much Government decisions regarding trade policy affecting the economic performance of these developing nations. Overall, this research has been partitioned into three parts. First part is about to deal with the trade policy formation effect in economic growth in developing countries. For the first time, such an empirical relationship has been developed for considering only developing nations. Moreover, Asian’s countries have been further divided into two broad categories i.e., second is institution how much effect in economic growth in Asian countries and third is the trade policy and institution both how much effect in economic growth in selected Asian countries. In use tariff and non-tariff variable, in tariff variables use AHSS. AHSS tariff rates are being taken as trade policy tool classifications have been chosen for making analysis. Time period is from 1996-2018 due to non-availability of output data beyond this time limit. AHSS trade policy instrument offering more efficient policies. After arriving at this economic growth, an attempt has been made in the second section to analyze quantitatively how political institution in these developing nations, their control of corruption, government effectiveness, political stability, regality quality, rule of law, voice and accountability their state fragility and their governance performance is affecting the decision-making process regarding trade policy formation. Moreover, for the first time, endogeneity of trade policy is being tried to capture by using diversified institutional parameters these affect decision making capacity regarding trade in a nation, which ultimately help in shaping the right policy choice. Time span is again from 1996-2018 but the sample size has been decreased to 14 developing nations after trimming the collected 132 number of nations on the basis of non-availability of data for various institutional and trade policy variables at initial stages. Instrumental variable technique dynamic-GMM technique is being applied here for capturing the endogeneity problem of trade policies in Trade Policy-Growth nexus. Results are supporting existing theory and literature regarding the relationship between various measures of trade policies and economic performance. Moreover, it has also been observed that institutional parameters are explaining more to the Trade Policy-Growth nexus in developing nations. Therefore, this study suggests to policy makers that such a policy framework should be designed for developing nation which covers both of these aspects side by side trade policy along with political institution reforms in policy making.
Impact of Financial Inclusion on Economic Growth for Emerging Asian Economies This study is an attempt to empirically evaluate the role of financial inclusion in economic growth of emerging Asian economies. For this purpose, 10 emerging Asian economies selected over the time period of fifteen years from 2005 to 2019 on the basis of the their GDP growth rate of last one and half decade. To examine the impact of financial inclusion an Index for financial services is constructed for above mentioned economies. This index is based on two major categories of financial services (Usage and Access). Financial access is based on accessibility of financial/banking services and it is on the footing of most widely used and acceptable banking sector indicators like ATM per 100,000 adults, and commercial bank branches per 100,000 adults. Usage of financial services is decided on the basis of outstanding loan from commercial banks as a percentage of GDP and outstanding deposits of commercial banks as a percentage of GDP. Inverse Euclidian distance technique is adopted for measurement of Index of Financial Inclusion as suggested by M. Sarma and Pais (2012). IFI along with other control variables (Physical Capital, Human Capital, FDI, Labour Force and Trade) used as independent variables in suggested model and GDP per Capita as dependent variable. Selection of variables and models is based on economic theory whereas estimation of the models is done through Generalized Method of Moment (GMM) and fixed/random effect model used to deal with Hetrosekdasticity and Autocorrelation issues. Under this methodology causal relationship between GDP per capita and IFI with other control variables is analysed through Granger causality test. Findings of this study concluded that financial inclusion effects positively and significantly to economic growth process in emerging Asian economies. Moreover, all those countries who possess higher level of financial inclusion on index also share a greater extent of income and economies with lower level of financial inclusion have lower level of income and lies under lower middle or lower income group as described by World Bank. After that, selected emerging economies were categorized as low, medium and high financial included economies on the basis of index to check the effect of IFI on above mentioned economies. In accordance with the results obtained from this study there is a need to boost up the magnitude of financial services to achieve a higher level of economic growth, such as encouraging youth to open bank account or account compulsion for all financial transactions, making banking sector friendlier and formalities regarding financial services must be eradicated or minimized. JEL Codes: B22, C33, C43, G28, O47 Key Words: Financial Inclusion; Index of Financial Inclusion; Panel Data; Economic Growth
Determinants of Time Allocation Decision to Labor Market and Non-Market Work in Pakistan Thesis Title: Determinants of Time Allocation Decision to Labor Market and Non-Market Work in Pakistan Time allocation to the paid market work and unpaid non-market work has an important impact on the development process of the country. The labor market of Pakistan is quite complex and faces a number of enormous odds. On one side, females in our country face a number of socio-economic and cultural problems that hinders their way to join the paid labor market work. On the other side, participation of males to the labor market has been gradually shrinking in the recent past. As far the non-market is concerned, a large number of females in our country are involved in a number of unpaid household activities. But, their valuable services in the production of household commodities are never recognized at the individual, societal and national level. Therefore, this thesis analyzes the determinants of time allocation to the paid labor market work and unpaid non-market work in Pakistan. The time allocation behavior of males and females is examined with respect to selected social, economic, and demographic variables by using the cross-sectional data from the Pakistan Labor Force Survey (2017-2018). Logit, probit, OLS, tobit, and instrumental variable techniques are applied for the sake of analysis. The important findings of the study suggested that age has a positive and age square has a negative relationship with the number of hours allocated per week to both paid labor market work and unpaid non-market work. Both educated males and females allocate relatively lesser time to the labor market work as compared to their uneducated counter parts. In case of non-market work, educated females allocate relatively lesser number of hours per week to housework and household agricultural work but relatively more number of hours per week to the child work. Empirical results of marital status provided evidence that both married males and females allocate more time to the labor market work. Similarly, married females allocate more time to both housework and child work. Presence of small children in the family has a positive relation with time allocation of males to the labor market work but negative relation for females. However, females having small children in the family allocate more time to the non-market activities. The results indicate that males from larger household size and joint families allocate more time per week to the labor market work and negative for females. For non-market work, a negative association exits between joint family system and time allocation to the housework and household agricultural work. On the other hand, females from joint families allocate more time to the child work. Males and females from all occupational categories allocate relatively lesser time to the labor market work as compared to their counterparts from elementary occupation. Similarly, males and females from Sindh, KPK, and Baluchistan have a lower LFP and time allocation to the paid market work as compared to that of Punjab. However, females from Sindh, KPK, and Baluchistan allocate more time per week to the non-market activities as compared to the Punjab.
Assessing the Impact of Energy Poverty on CO2 Emission in Pakistan Energy poverty as an issue was raised in the late 20th century at global level then policymakers, international organizations, and researchers focused on it. The accessibility as well as affordability to clean energy services are the key factors towards sustainable economic growth. If a society has no access to clean energy sources, then there may be supply constraints. On the other hand, if a society is unable to afford clean energy sources, then there may be constraints on the demand side. In a nutshell constraint on demand and supply sides create energy poverty. In the same vein, present study tries to estimate energy poverty by utilizing various demand and supply side indicators in a multidimensional index approach. Further, three dimensions and fourteen indicators to measure energy poverty are used. Energy poverty dimensions are namely, energy services, clean energy, and energy affordability and uses equal weight strategy for three dimensions. The value of energy poverty index shows that overall energy situation improves and experienced a reduction in energy poverty in the entire period. At the second stage, study finds the impact of energy poverty and economic output on the CO2 emissions in the Pakistan economy over the period of 1990s to 2019. On the basis of unit root tests Johansen Cointegration technique is used to find the long run dynamic relationship. The results of Johansen Cointegration show a statistically significant long run relationship between energy poverty and CO2 emissions and does not hold the same relationship in the short run. Moreover, present study also uses GDP and GDP square terms in the model along with energy poverty to confirm the Environmental Kuznets Curve (EKC). EKC is basically a long run phenomenon so, in the short run GDP and square term of GDP are not statically significant. The government must give attention to increase the share of renewable energy in total energy mix. Keywords: CO2, Energy Poverty, Multidimensional Index, Gross Domestic Product, EKC, Johansen Cointegration, ADF
Internal & External Sources of Financial Growth Leading to Economic Development of Pakistan: Dynamic Analysis of Selected Islamic Countries Many countries, these days are financially and economically integrated. Indeed, financial indicators are linked with the economic growth of an economy. Local and global financial and macroeconomic factors, in addition to the capital flows from the Islamic Countries have historically played a significant role in the economic growth and development of Pakistan. Different countries are trying to realign their interest while pursuing their long term political and economic objectives. Statistical analysis of data reveals that financial and capital flows, in terms of FDIs, from one economic and regional block to various Islamic Economies have shown a trade-off which means increasing flow of FDIs to one Islamic country is observed at the cost of decreasing FDIs in some other country. There are various empirical methods to research such type of relationships between financial flows and economic growth. This study has been conducted with the objective of finding such relationship between financial sector growth and economic growth of in connection with Bangladesh, Indonesia, Kuwait, Malaysia, Pakistan, Qatar, Saudi Arabia, Türkiye, UAE, for the period of 2002Q1- 2020Q4 using dynamic econometric models. The issue of causality between financial sector growth and economic growth had remained inconclusive. Pre-dominantly literature reveals significant role of financial system as one of the essential fundamentals of economic growth and development of an economy. This study initially applies Granger Causality Test, in order to examine financial and economic connectivity of Pakistan with the other Islamic countries. The study uses Autoregressive Distributed Lag (ARDL) approach to cointegration to examine the long run relationship between economic growth and financial sector growth,. This study employs the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) models to examine the impact of financial sector growth and its volatility on economic growth volatility. These models have clear provision for the inclusion of internal and external variables not only in the mean equation but also in the variance equation enabling us to test effectiveness of external (from Islamic countries) and domestic financial volatility on the economic growth of Pakistan. The study finds unequivocal direction of relationship from financial sector growth towards Economic Growth of Pakistan. There is a great potential of financial integration between Pakistan and the selected Islamic countries. This study also finds that any volatility occurring in terms of Foreign Direct Investment, Bank Deposits, Domestic Credit to Private sector, and Net Financial Assets, creeps into fluctuation of Pakistan’s Economic Growth. The results shows economic growth volatility of Pakistan is affected by financial sector growth and its volatility.
Implications of Financial Development on Economic Resilience of South Asian Countries The purpose of this study is to measure the impact of financial development on economic resilience of south Asian countries by constructing an economic resilience index on greater framework as previously the work on economic resilience was done on individual level and on developed countries however this study measures the economic resilience of South Asian Countries using PCA. Many researchers have conducted their studies in different aspect of determinants of economic resilience. Economic resilience is a big issue for South Asian countries as they have lack of resources to fulfill needs of people. This is one of the major cause of poverty in South Asia. Unemployment, increased rate of inflation, high interest rates and low level of literacy are some other reasons that makes these countries prone to different economic shocks. They also lack accurate measures to face these economic shocks efficiently. In this study we focus on the ways through which we can attain the economic resilience. This study mainly focuses on analyzing the impact of financial development among other factors on economic resilience using panel data of 5 countries for the period 2001-2020. In this regard an index is also constructed to identify resilient state of economies. Data of the variables used in construction of index is obtained from different sources like International Monetary Fund (IMF), Asian Development Bank for Asia, World Development Indicators (WDI), and self-constructed index which has indicators of macroeconomic stability, market efficiency, governance and social sector domains. Fixed-effect, random-effect models are used in this study for the purpose of estimation. In order to check robustness and to handle the problem of endogeneity FE2SLS technique is used. There is growing consensus that financial development can be a good indicator for making countries more resilient towards economic shocks as well as financial development play a significant role in mitigating the effects of economic exogenous shocks. Strengthening the financial system can bring benefits not only in the case of financial crisis but also provide greater stability in post crisis. The study helps the policy makers to adopt the policies that can make their economies more resilient through financial development. Key Words: Economics Resilience, Resilience index, Financial Development