This paper empirically examines the effect of foreign capital inflows on domestic price levels, monetary expansion, and the exchange rate volatility for Pakistan using linear and nonlinear causality tests. The key message emerging from the analysis is that there is a significant inflationary...

In this paper we present arguments for increasing expenditure on the education sector. We show that there exist large inequalities in the distribution of education servicesacross regions and across genders so that ensuring equal opportunity for all in education, either for normative or economic...

This paper studies the discretionary fiscal policy, its size and particularly the impact of discretionary government spending on output, employment level and inflation over the period of 39 years from 1971-72 to 2009-10. The discretionary fiscal policy is identified through the residual term...

The relationship between money and prices has been a debated issue among economic schools of thought particularly between the Monetarists and the Keynesians. The monetarists claim that changes in money stocks cause changes in price levels. In other words, the direction of causation runs from...

Achieving economic growth is an important goal of any country. However, in recent years it has increasingly been realised that economic growth is a necessary but not a sufficient condition for human development. Pakistan provides a good example of a country which has historically enjoyed a...

This paper re-examines the causal relationship between stock prices and macro variables like consumption expenditure, investment spending, and economic activity (measured by GDP) in Pakistan. Using annual data from 1959-60 to 1998-99 and applying cointegration and error correction analysis, the...

Income, Money, and Prices are important macroeconomic variables which play crucial roles in an economy. There has been a long debate in economics regarding their roles. For example, the Monetarists claim that money plays an active role and leads to changes in income and prices. In other words,...

This paper attempts to explore a seasonal pattern, the Ramadhan effect, in the Pakistani equity market. Ramadhan, the holy month of fasting, is expected to affect the behaviour of stock market in Pakistan where the environment in Ramadhan is different from other months as people devote more time...

The effect of changes in money supply on stock returns has been a matter of controversy among economists for many decades. Those in favour of presence of links between money market and stock market argue that any change in money supply creates a wealth effect which disturbs the existing...

This paper examines the validity of the Random Walk Model in the Pakistani equity market. The model, extensively tested in other equity markets, implies that past movements in a stock price are not helpful in predicting future prices of that stock. The model states that changes in stock prices...