Abstract/Description
This paper delves into the intricate dynamics of fiscal policy, particularly in the context of developing economies, exemplified by Pakistan. While fiscal stimuli are commonly deployed to counter economic crises and foster growth, their implementation often results in increased public debt, inflation, and a host of macroeconomic challenges. Our study examines Pakistan as a case study, analyzes a) if the fiscal policy is procyclical, acyclical or counter cycle, b) how shocks in GDP and fiscal policy are received by key macroeconomic indicators including public debt, CPI, exchange rate, and money market rate etc. and c) what are the political economic and institutional determinants of the behavior of fiscal policy identified in (a). Using quarterly data from 2003Q3 to 2023Q2, we have worked on (a) and (b) while our work on (c) is in progress and we aim to complete it by the end of September, well before the conference.
Keywords
Fiscal Policy, Public Debt, Economic Growth, Cyclicality
Location
S1 room, Adamjee building
Session Theme
Evolving Dynamics in Inflation, Monetary and Fiscal Policy
Session Type
Parallel Technical Session
Session Chair
Kalim Hyder, State Bank of Pakistan
Session Discussant
Ilfan Oh, Institute of Business Administration ; Karim Khan, Pakistan Institute of Development Economics
Start Date
10-12-2024 3:15 PM
End Date
10-12-2024 5:15 PM
Recommended Citation
Sarwar, M., Shabbar, S., & Hashim, Z. (2024). From Boom to Bust: The Perils of Pro-Cyclicality in Fiscal Policy. CBER Conference. Retrieved from https://ir.iba.edu.pk/esdcber/2024/program/22
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Included in
From Boom to Bust: The Perils of Pro-Cyclicality in Fiscal Policy
S1 room, Adamjee building
This paper delves into the intricate dynamics of fiscal policy, particularly in the context of developing economies, exemplified by Pakistan. While fiscal stimuli are commonly deployed to counter economic crises and foster growth, their implementation often results in increased public debt, inflation, and a host of macroeconomic challenges. Our study examines Pakistan as a case study, analyzes a) if the fiscal policy is procyclical, acyclical or counter cycle, b) how shocks in GDP and fiscal policy are received by key macroeconomic indicators including public debt, CPI, exchange rate, and money market rate etc. and c) what are the political economic and institutional determinants of the behavior of fiscal policy identified in (a). Using quarterly data from 2003Q3 to 2023Q2, we have worked on (a) and (b) while our work on (c) is in progress and we aim to complete it by the end of September, well before the conference.