Economic uncertainty and growth performance: a macroeconomic modeling analysis for Pakistan

Economic uncertainty and growth performance: a macroeconomic modeling analysis for Pakistan This paper investigates the effects of economic uncertainty on growth performance of Pakistan through developing a small macroeconomic model. The GARCH method has been used for construction of economic uncertainty variables related to macroeconomic policies. The structural outcomes clearly indicate that economic policy uncertainty affects negatively on real and nominal sectors of Pakistan. The forecasting of model and different policy uncertainty simulation shocks also indicated that an adjustment in economic policies due to change of policy objectives create uncertain environment in country, which not only deteriorates the investment climate of country, it also affects the economic growth. Our study concludes that economic uncertainty not only reduces the current investment and economic growth, it also affects the future decision of investment and economic growth. This study suggests that sustainable and steady economic policies always reduce economic uncertainty and promote the confidence of economic agents, which help in achieving the targets of investment, trade and economic growth. Our study also maintains the predictability and reliability of government policies for the accomplishment of macroeconomic goals and economic development of country. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

Economic uncertainty and growth performance: a macroeconomic modeling analysis for Pakistan

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Publisher
Springer Netherlands
Copyright
Copyright © 2013 by Springer Science+Business Media Dordrecht
Subject
Social Sciences, general; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-013-9841-5
Publisher site
See Article on Publisher Site

Abstract

This paper investigates the effects of economic uncertainty on growth performance of Pakistan through developing a small macroeconomic model. The GARCH method has been used for construction of economic uncertainty variables related to macroeconomic policies. The structural outcomes clearly indicate that economic policy uncertainty affects negatively on real and nominal sectors of Pakistan. The forecasting of model and different policy uncertainty simulation shocks also indicated that an adjustment in economic policies due to change of policy objectives create uncertain environment in country, which not only deteriorates the investment climate of country, it also affects the economic growth. Our study concludes that economic uncertainty not only reduces the current investment and economic growth, it also affects the future decision of investment and economic growth. This study suggests that sustainable and steady economic policies always reduce economic uncertainty and promote the confidence of economic agents, which help in achieving the targets of investment, trade and economic growth. Our study also maintains the predictability and reliability of government policies for the accomplishment of macroeconomic goals and economic development of country.

Journal

Quality & QuantitySpringer Journals

Published: Mar 29, 2013

References

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