THE IMPACT OF FINANCIAL MONETARY ECONOMIC VARIABLES ON ECONOMIC GROWTH

Aniba Zia; Mir Zeeshan Ali; Muhammad Naveed Jamil; Zeeshan Mukhtar; Kamaran Qader Yaqub; Kashif Javed

doi:10.71146/kjmr185

Authors

Aniba Zia Research Scholar, Economics Department, Khawaja Fareed Government Post Graduate College, Rahim Yar Khan, Pakistan. Author
Mir Zeeshan Ali School of Economics and finance, Henan University, Kaifeng, China. Author
Muhammad Naveed Jamil Institute of Business Administration, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan. Author
Zeeshan Mukhtar Institute of Business Administration, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan Author
Kamaran Qader Yaqub Technical College of Administration, Department of Accounting Technique, Sulaimani Polytechnic University, Iraq. Author
Kashif Javed Institute of Business Administration, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan. Author

DOI:

https://doi.org/10.71146/kjmr185

Abstract

Examining the effects of GDP, FDI, inflation, interest rates and currency rates on Pakistan’s economic growth is the primary goal of this research. Pakistan’s capacity to lower poverty and raise living standards has been hampered by its erratic economic growth in recent decades. The macroeconomic factors (GDP, FDI, inflation, interest rate and exchange rate) and their effects on Pakistan’s economic growth between 1970 and 2022 are examined in this paper. The study investigated the short and long term impacts of macroeconomic factors on Pakistan’s economic growth using an Auto Regressive Distributed Lag (ARDL) model. In this model, the Augmented Dickey-Fuller (ADF) unit root test is utilized for Stationarity. The ARDL bond test validated the variables long-term association. The findings indicate that, over the long run, FDI and the exchange rate have a positive and large impact on economic growth, while inflation and the real interest rate have a negative and negligible impact. Additionally, this study shows a strong long-term correlation between the factors. In order to achieve sustainable economic growth, the study’s findings suggest that policymakers should prioritize keeping inflation low and promoting investment through advantageous interest rate.