Effect of Macro-economic Variables on Economic Growth of Pakistan

Abstract

The main purpose of this study explores the effect of macroeconomic variables on the economy of Pakistan. This study contributes to the existing literature by investigate the empirical methods for estimation the impact of macroeconomic variables (inflation, interest rate, export and exchange rate) on the growth of economy. Used the time series data of 50 years during the period of 1968-2017 for the analysis. Data collected from the websites of World Bank and state bank of Pakistan. The findings of this study indicated that inflation is negative and insignificantly effected on growth, while interest and exchange rate is negative but significant and export has positive and significant impact on the growth of economy. The results suggested that the government should tight the policies and control the other factors which can badly affect the economic growth of Pakistan. Interest rate, exports exchange rate  should also be controlled according to the development of economy.

Keywords: Economic growth; inflation; interest rate; exports; exchange rate; Pakistan