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Business Review

Abstract

There is disagreement on the desirability of devaluation in the LDCs. Since the de-linking from USA dollar in January 1982, the Pakistan rupee has been losing its value vis-à-vis US dollar and other important currencies. The purpose of the paper was to see the response of domestic output to fiscal and monetary policies besides exchange rate and terms-of-trade. These policies have stable and long- run relationship with the domestic output. However, the impact of money supply and exchange rate is more robust than the other variables. Easy monetary policy has a favourable impact on domestic output. Fiscal discipline is the need of the hour because persistent and large budget deficit breeds inflation.

Keywords

Depreciation, Output, Cointegration, Causality, Pakistan

DOI

https://doi.org/10.54784/1990-6587.1194

Journal of Economic Literature Subject Codes

F32 E0, E6

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Published Online

March 02, 2021

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Economics Commons

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Article Timeline

Submitted

25-02-2021

Published

01-07-2011

 
 

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