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- Title
Exchange Rate, Interest Rate and Ricardian Equivalence Evidence from Pakistan.
- Authors
Waqas, Muhammad; Awan, Masood Sarwar
- Abstract
The aim of this study is to investigate the validity of Ricardian Equivalence Hypothesis in Pakistan by using annual data from 1973-2010. In our previous studies we investigated the Ricardian Equivalence Hypothesis and its sources of deviation in Pakistan by using Structural Consumption function and Euler Equation approach. The present study investigated this hypothesis in terms of rate of interest and exchange rate. Results of Auto Regressive Distributed Lag cointegration investigate the long run relationship among variables. By using OLS technique this study rejected Ricardian Equivalence Hypothesis in case of Pakistan. The findings of the study demonstrate the focus towards the significance of fiscal policies in raising private consumption and controlling budget deficits.
- Subjects
PAKISTAN; FOREIGN exchange rates; INTEREST rates; RICARDIAN equivalence theorem; FISCAL policy; ECONOMIC history
- Publication
Romanian Economic Journal, 2012, Vol 15, Issue 46, p249
- ISSN
1454-4296
- Publication type
Article