All Theses and Dissertations

Degree

Master of Science in Economics

Department

Department of Economics

Date of Award

Fall 2016

Advisor

Dr. Qazi Masood Ahmed

Second Advisor

Dr. Farooq Pasha

Committee Member 1

Dr. Qazi Masood Ahmed, Institute of Business Administration, Karachi

Committee Member 2

Dr. Farooq Pasha, Institute of Business Administration, Karachi

Project Type

Thesis

Access Type

Restricted Access

Document Version

Final

Pages

x, 118

Subjects

Economics, Taxation

Abstract

Augmentation of investment is a primary goal for any government. To attain that objective it can resort to either tax or direct expenditures. In order to analyze which is a more efficient method in the case of Pakistan, the current study uses data from the country's manufacturing Sector. The time series data set since 1972 to 2013 is used. Bounds testing approach to cointegration used in the structure of Autoregressive Distributed Lag is employed for understanding the behavior of the different variable, applying Neo-Classical Investment theory. The results show the importance of text expenditure policy, in the short run, through the cost of capital, as a determinant to boost private investment in the economy, under circumstances of low inflation. On the other hand, in high inflation periods, the direct expenditure is found to be more potent. The empirical evidence shows a strong role of direct expenditure in influencing both the short-run and the long-run behavior of investment in the economy.

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