Impact of high oil prices on Pakistan's Economic growth

日期 : Feb 2017 - Jul 2017

This paper analyses the effects of fluctuation on economic activity in Pakistan. Economic activity is examined through GDP, government Expenditures, government revenues, and inflation and in which we have taken a proxy for international oil prices per barrel as the change in annual oil prices and all other independent variables are used as GDP ratio & GDP Growth rate is used as Dependent variable Time series data from 1971 to 2015 are used for empirical analysis. After checking the stationary of the variables (through ADF test), Autoregressive Distributive Lag (ARDL) approach to co-integration is used to find long run association among variables. Results shows inflation and government revenue have negative and significant impact on economic growth of Pakistan whereas government spending and change in oil prices have Positive impact on economic growth. Whereas government spending have positive impact in the long run but are insignificant determinant of economic growth in long run .Diagnostic tests confirm that our model is free from autocorrelation with satisfactory functional form government spending should be increased ,it should help in the prosperity of an economy in the long run..