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The Impact Of Fiscal Policy On Macroeconomic Conditions In Pakistan: Insights From A Structural Vector Autoregression Analysis, Sarnaila Sharif, Saima Nawaz
The Impact Of Fiscal Policy On Macroeconomic Conditions In Pakistan: Insights From A Structural Vector Autoregression Analysis, Sarnaila Sharif, Saima Nawaz
Business Review
This article explores the relationship between fiscal policy and macroeconomic conditions in Pakistan using a robust Structural Vector Autoregression (SVAR) model. Since fiscal shock has the tendency to put a constraint on the future path of government spending and taxes, as the intertemporal budget constraint holds. This element has been missed in most of the VAR studies. This study extends Structural Framework by incorporating the dynamic nature of public debt in analyzing fiscal policy shocks. Our investigation focuses on estimating the responses of output, inflation, and debt interest payments to changes in government spending and taxes, while keeping track of …