Physical Sciences and Mathematics Commons^™

Expansionary Fiscal Contraction Hypothesis: An Evidence From Pakistan, Aisha Irum

CBER Conference

The fiscal sector in Pakistan has been facing mule-layered challenges over several years. One of the reasons is the stubborn and unproductive nature of its public expenditure, and the other one is the lower tax revenues. This issue of hovering fiscal deficit is mostly dealt with the tools of fiscal contraction/austerity which can have a potential impact on the private sector of the economy. Thus, the question which has been addressed in this study is whether the Expansionary Fiscal Contraction (EFC) hypothesis holds in case of Pakistan. Fiscal contraction episodes have been identified using growth in the growth rates of …