Public Economics Commons^™

A Review On Fiscal And Debt Policies In Pakistan, Karim Khan

CBER Conference

Pakistan has been pursuing an active albeit expansionary fiscal policy since 1970s. In the mid1970s to early-1980s, such policy choice was manifested in externally financed development spending, primarily in the form of investment in public enterprises. Despite excessive deficit financing, Pakistan’s economic performance never took off; rather, it remained on a path of truncated growth which, in turn, created structural hurdles like low productivity, poor investment climate, and higher unemployment. Likewise, deficit financing has been threatening the sustainability of fiscal framework as excessive public spending is not accompanied by corresponding enhances in domestic revenues. Consequently, these policies have caused persistence …

Authoritarian Legality Of Sifc: An Inquiry Into The Dual State And Economic Decision Making In Pakistan, Hassan Zaheer

CBER Conference

Pakistan is no stranger to the union of authoritarianism with its economic decision-making. From the grand designs of Ayub Khan’s industrialization to Bhutto’s nationalization to Zia’s privatization, the country has been practically a laboratory of authoritarian experimentation over nature and the processes of the national economy. However, certain ideas have been coherent throughout time and space when it comes to the fusion of authoritarian law, arbitrary power, and economic decisions. These ideas have historically shaped the fusion of authoritarian power with economic decisions in the country. Resultantly, the authoritarian legality approach establishes a Dual-State in Pakistan by undermining normative processes …

Pros And Cons Of Debt Financing: An Objective Analysis, Anwar Shah

CBER Conference

Debt financing plays an important role in the modern financial system. It is claimed that the interest rate equilibrates demand and supply in the loanable funds markets and helps in the efficient allocation of financial capital. It is also claimed that interest rates simply break up investment risk to suit the requirements of lenders and users of funds. However, the occurrence of the Global Recession in 2008 due to excessive debt financing in real estate (mortgage loans) and the resemblance of interest rate with usury requires investigation of the other side of debt financing. This paper aims to fill this …

Conference Proceedings: Fourth Annual International Conference: Rethinking Economics In The Contemporary World, Shumaila Omar [Editor], Uzair Arif [Ed.], Tabeer E Zehra [Ed.], Sania Zehra [Ed.], Tooba Zaheer [Ed.]

IBA Press

The 4th Annual International Conference on Rethinking Economics, organized by the Institute of Business Administration (IBA) Karachi, provided a dynamic platform for academics, practitioners, and policymakers to explore diverse themes shaping the global economic landscape. The conference highlighted critical issues such as digital transformation, urban infrastructure, environmental challenges, monetary and fiscal policy, and human development. This collection is an amalgamation of abstracts from the papers presented at the conference.

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 …

Inflation, Monetary Policy, And The Sacrifice Ratio, Leef H. Dierks

CBER Conference

Motivated by the 2022 uptick in headline inflation and the marked shift towards globally more restrictive monetary policies, this paper examines the sacrifice ratio, i.e., the percentage cost of actual production lost to every one percentage point decrease in (trend) inflation, for selected Southeast Asian economies. Results indicate that upon adopting a contractive monetary policy, GDP growth dropped by up to 0.5 per cent, confirming that monetary authorities’ disinflationary policies typically trigger declines in both output and employment. However, as even minor adjustments to the way of determining the sacrifice ratio lead to varying results, caution ought to be applied …

Computational Calculation Of Sovereign Default Probabilities: Pakistan's Case, Salman Zaffar

CBER Conference

This paper uses Black-Scholes-Merton model to quantitatively assess sovereign debt sustainability of Pakistan. Both the International Monetary Fund and Asian Development Bank have separately proposed applying Black Scholes-Merton model to calculate the sovereign default risk. Historically, the Black-Scholes Merton Model has been used to analyze corporate default risk. Both the sovereign and corporate default risk calculation are based on contingent claims approach which calculates risk by reading the sovereign and corporate balance sheets, respectively. Thus, in light of the proposition by these two financial bodies this paper calculates the default probability of Pakistan in 2001-2022. As the efficacy, it is …

3rd Annual International Conference Proceedings: Challenging Linearity, Centre For Business And Economic Research (Cber), School Of Economics And Social Sciences (Sess)

Conference Proceedings

As we live in an era where the knowledge landscape is rapidly changing and becoming more complex, answering age-old questions about our society, economy, and environment has become more challenging today than ever before. In the wake of this change and challenge, falling back on linear and myopic conclusions is sometimes all too irresistible. A fatigue of imagination that leads to easy answers seems to be prevalent within several disciplines and is sometimes driven by ideological biases. Resultantly, the progress in addressing economic disadvantage, social isolation, and discrimination, psychological distress remains suboptimal often because of linear conceptual frameworks which fail …

Dissecting Public Expenditure : Part – Ii, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Debt dynamics requires continued primary budget surpluses to be generated for gradually lowering the burden of interest payments and reducing public debt-GDP ratio. Revenue mobilisation of an additional 1.5 percent of GDP annually from those outside the tax net (divided evenly between the provinces and the federal government) insulating the lower-middle and poor classes appears a plausible means to achieve these surpluses. The pension bill is growing much faster than any other expenditure head and a switch has to be made from the present defined benefits to the defined contribution system. The results from tax and pension reform would appear …

The Macroeconomic Impacts Of Government Debt In Pakistan, Ateeb Akhter Shah Syed, Kaneez Fatima, Junaid Kamal

Business Review

This paper examines the Ricardian equivalence hypothesis for Pakistan using a vector error-correction model. The sample period extends from June 2002 to January 2020. The results are reported using variance decompositions and impulse response functions. The base model contains six variables and is estimated with 4 lags. We find support for the idea that wealth does not increase as government debt increases; Hence, it proves the fact that economic agents are rational actors and foresee current expansionary actions of the government that result in accumulation of debt as the present value of future taxation that they have to pay and …

Human Development And Inequality - Panel Discussion Ii With Undp Pakistan, Undp Pakistan

CBER Conference

In collaboration with the UNDP Pakistan, a panel discussion on “Sustainable Development: Inequality and Inclusive Growth” took place amongst Mr. Knut Ostby, Resident Representative, UNDP Pakistan, Dr. S Akbar Zaidi, Executive Director, IBA, Dr. Sania Nishtar, Special Assistant to the Prime Minister (SAPM) on Poverty Alleviation and Social Safety, and Dr. Waqar Masood, SAPM on Revenue. The session was moderated by Asim Sajjad Akhtar. Mr. Knut Ostby said, “As one of the first countries to pledge its commitment to the 2030 Agenda on the SDGs, Pakistan understands the simple truth that equality is the cornerstone of sustainable development”. Mr. Ostby …

Does Esg Investment Enhance Investment Returns, Ca. Hemlata Chelawat, I.V. Trivedi

Business Review

Over the past decade, Environmental, Social and Governance Investment or ESG Investment has become a mainstream investment approach in the investment community around the world, especially in the US and Europe. There is increasing evidence from academic and practitioner research around the world that better ESG performance by companies leads to reduction in risks, improvement in financial performance, higher stock market valuations and hence, enhanced returns for investors investing in stocks of such companies. Hence, incorporating ESG factors can lead to better informed and improved investment decisions. This has led to development of ESG indices and fonds, to enable investors …

Book Review Of: Why Nations Fail, Ashutosh Mani Dixit

Business Review

The purpose of this article is to assess the contribution of Why Nations Fail about its forefront claim that institution is exclusive determinant of nation’s economic outcome. This paper will examine its findings and put forward arguments and claims of prominent studies about economic development. The paper has been organized in two more section. Immediate section presents chapter wise summary of the book highlighting strengths and key outcomes. While the third section, which is the purpose of the article, offers a critique, than sums up in final section providing some concluding comments.

Disconnects & Mismatches, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Popular discourse pertaining to Pakistan`s economic problems usually takes place at a highly superficial level, looking merely at symptoms. It is essential to go beyond generalisations and diagnose the real sources of the malignancy affecting the economy.

Several disconnects and mismatches of various kinds are sapping the economy`s energy and vitality. These need to be fixed as part of a medium-term consensus agenda. First, unlike the past where the rural population lived under miserable conditions, the increase in commodity prices has transferred additional purchasing power worth about Rs450-500bn from the urban economy to the rural. Rural incomes are exempt from …

The Inadequacy Of Our Economic Agenda, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

The government and opposition parties deserve the nation’s gratitude for sitting together to evolve a national consensus on finding solutions to the economic problems facing the country. My research suggests that the setting of long-term economic direction, continuity and consistency of economic policies, as well as the predictability and transparency of decision-making, are important factors that boost investor confidence and stimulate economic growth. Changes in political regimes, under those conditions, do not make any significant negative impact.

The present efforts by the federal government’s economic team to seriously discuss a 10-point economic agenda are highly commendable. But in my view, …

Research: Pide Policy Viewpoint, Vice Chancellor .

Business Review

RENEW CITIES TO BE THE ENGINES OF GROWTH

PIDE Cities Research Programme was initiated in Karachi with a conference titled Cities: the Engine of Growth on November 15-16, 2006. The conference was held in our largest city and was well-attended by economists, architects, town planners, Nazims, government officials, NGOs, journalists, and other citizens. The discussion was animated and about twenty-five speakers addressed the gathering. All points of view were represented and debated. The main points of the discussion that took place there may be summarised as follows: • All segments of our society are dissatisfied with the current state of …