The Nexus Between Monetary Policy and Economic Growth in Pakistan: Empirical Evidence Based on Bound Test Approach

Authors

  • Mahmood Ul Hassan Assistant Professor, Department of Economics, University of Sargodha, Sargodha, Pakistan
  • Hina Ali Assistant Professor, Department of Economics, The Women University, Multan Pakistan
  • Saeed Ur Rahman Lecturer, Department of Economics, Ghazi University, Dera Ghazi Khan. Pakistan
  • Sabiha Parveen Visiting Lecturer, Department of Economics, The Women University, Multan, Pakistan

DOI:

https://doi.org/10.47067/ramss.v4i3.167

Keywords:

Auto-Regressive Distributed Lag, Inflation, Interest rate, Exchange rate, Money supply, Investment, Consumer Price Index, Monetary Policy

Abstract

The objective of this research is to examine the monetary policy's impact on economic growth. Variables of study are Gross domestic product, Inflation, rate of interest, Exchange rate, Money supply, Investment, and Consumer Price Index and time series data is collected from. Gross domestic product is a dependent variable and all other variables are independent and have a great effect on the explanatory variable. In this study, the Augmented dicky fuller test is used to check out the stationarity of our selected variables and after that autoregressive distributed lag model co-integration technique is applied to estimate the parameters of the model. The result shows that inflation, interest rate, and consumer price index show a negative impact on gross domestic product. While other variables such as exchange rate, money supply, and investment show a positive impact on GDP. The study recommended that the desired level of output and employment can be attained by adopting sufficient strategies that reduce inflation in the economy.

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Published

2021-07-30

How to Cite

Hassan, M. U. ., Ali, H. ., Rahman, S. U. ., & Parveen, S. . (2021). The Nexus Between Monetary Policy and Economic Growth in Pakistan: Empirical Evidence Based on Bound Test Approach. Review of Applied Management and Social Sciences, 4(3), 613-624. https://doi.org/10.47067/ramss.v4i3.167