The Role of Budget Deficit in the Economic Growth of Pakistan

Najid Ahmad

Authors

Najid Ahmad

Keywords:

GDP, budget deficit, OLS, Pakistan

Abstract

The basic aim of this paper is to investigate the relation between Budget Deficit and Gross Domestic Product of Pakistan. There are three views about this relation. Keynesian says that there is a positive relation between budget deficit and economic growth while neo-classical views that there is an inverse relation between budget deficit and economic growth. Recardian says that there is neutral relation between budget deficit and economic growth. A time series data for the period of 1971-2007 has been used to check the relation between budget deficit and economic growth of Pakistan. GDP is taken as dependent variable, FDI and budget deficit as independent variables. ADF test has been used to check the stationary of the data. All variables get stationary at 5% level of significance at level. The results of Granger causality test show that there is bi-directional causality running from budget deficit to GDP and GDP to budget deficit. OLS results show that there is positive but insignificant relation between budget deficit and GDP of Pakistan. In this way, the results follow the Recardian approach that there is neutral relation between budget deficit and economic growth of the country. Budget deficit has no role in bringing back the economy to its equilibrium.

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How to Cite

The Role of Budget Deficit in the Economic Growth of Pakistan. (2013). Global Journal of Management and Business Research, 13(30), 1-4. https://journalofbusiness.org/index.php/GJMBR/article/view/

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Author Biography

Najid Ahmad

Najid Ahmad is an accomplished academic economist currently serving as an Associate Professor in the Economics department at Hunan University of Science and Technology, China. With a PhD in Economics from Dongbei University of Finance and Economics (2017) and an M.Sc in Economics from Bahauddin Zakaryia University, his research spans macroeconomic policy, foreign aid, income inequality, and urban environmental economics. He has published over 80 scholarly works, amassing more than 3,200 citations, with an h-index of 23 and an i10-index of 42. His notable papers include 'The Role of Budget Deficit in the Economic Growth of Pakistan' and 'A Time Series Analysis of Foreign Aid and Income Inequality in Pakistan'. Dr. Ahmad also contributes as a journal reviewer and holds an ORCID iD (0000-0002-7305-825X), an OpenAlex profile, and other academic identifiers. His current work examines the spatial effects of regulation on resident health in Chinese urban agglomerations.

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