Dynamics of Public Policy on Economic Activity: The Case of Pakistan

The unanticipated domestic and international changes in conjunction with policy discretion become reason for shocks to overall economy that affect overall economic growth. Based on methodology by Blanchard and Perotti (2002) the study used timing of fiscal decisions in a Structural Vector Auto-Regr...

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Main Authors:	Saima Shafique, M. Mansoor Ali, Anwar-ul Mujahid Shah, Seema Zubair
Format:	article
Language:	EN
Published:	IDEA PUBLISHERS 2020
Subjects:	Social Sciences H Political science J
Online Access:	https://doaj.org/article/a3bccbc5f1034532a16a2021f944d80f
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spelling	oai:doaj.org-article:a3bccbc5f1034532a16a2021f944d80f2021-11-04T15:46:02ZDynamics of Public Policy on Economic Activity: The Case of Pakistan10.47264/idea.lassij/4.2.182664-8148https://doaj.org/article/a3bccbc5f1034532a16a2021f944d80f2020-12-01T00:00:00Zhttps://ideapublishers.org/index.php/lassij/article/view/136https://doaj.org/toc/2664-8148 The unanticipated domestic and international changes in conjunction with policy discretion become reason for shocks to overall economy that affect overall economic growth. Based on methodology by Blanchard and Perotti (2002) the study used timing of fiscal decisions in a Structural Vector Auto-Regression (SVAR) to map dynamics of shocks due to tax revenue, government expenditures and aggregate output in Pakistan. When tax decisions precede expenditure decision, the tax shocks have a volatile short run impact causing expenditures to sharply adjust. Expenditure shocks persistently increase tax revenues and government expenditures. But in the second specification, expenditure shocks reduce the tax revenue and aggregate output that reverts to equilibrium only in the long run. The response of output shocks is almost identical for both the scenarios. Therefore, growth in output increases taxes collection in Pakistan enabling better management of burden of debt and deficit. Saima ShafiqueM. Mansoor AliAnwar-ul Mujahid ShahSeema ZubairIDEA PUBLISHERSarticleSocial SciencesHPolitical scienceJENLiberal Arts and Social Sciences International Journal, Vol 4, Iss 2 (2020)
institution	DOAJ
collection	DOAJ
language	EN
topic	Social Sciences H Political science J
spellingShingle	Social Sciences H Political science J Saima Shafique M. Mansoor Ali Anwar-ul Mujahid Shah Seema Zubair Dynamics of Public Policy on Economic Activity: The Case of Pakistan
description	The unanticipated domestic and international changes in conjunction with policy discretion become reason for shocks to overall economy that affect overall economic growth. Based on methodology by Blanchard and Perotti (2002) the study used timing of fiscal decisions in a Structural Vector Auto-Regression (SVAR) to map dynamics of shocks due to tax revenue, government expenditures and aggregate output in Pakistan. When tax decisions precede expenditure decision, the tax shocks have a volatile short run impact causing expenditures to sharply adjust. Expenditure shocks persistently increase tax revenues and government expenditures. But in the second specification, expenditure shocks reduce the tax revenue and aggregate output that reverts to equilibrium only in the long run. The response of output shocks is almost identical for both the scenarios. Therefore, growth in output increases taxes collection in Pakistan enabling better management of burden of debt and deficit.
format	article
author	Saima Shafique M. Mansoor Ali Anwar-ul Mujahid Shah Seema Zubair
author_facet	Saima Shafique M. Mansoor Ali Anwar-ul Mujahid Shah Seema Zubair
author_sort	Saima Shafique
title	Dynamics of Public Policy on Economic Activity: The Case of Pakistan
title_short	Dynamics of Public Policy on Economic Activity: The Case of Pakistan
title_full	Dynamics of Public Policy on Economic Activity: The Case of Pakistan
title_fullStr	Dynamics of Public Policy on Economic Activity: The Case of Pakistan
title_full_unstemmed	Dynamics of Public Policy on Economic Activity: The Case of Pakistan
title_sort	dynamics of public policy on economic activity: the case of pakistan
publisher	IDEA PUBLISHERS
publishDate	2020
url	https://doaj.org/article/a3bccbc5f1034532a16a2021f944d80f
work_keys_str_mv	AT saimashafique dynamicsofpublicpolicyoneconomicactivitythecaseofpakistan AT mmansoorali dynamicsofpublicpolicyoneconomicactivitythecaseofpakistan AT anwarulmujahidshah dynamicsofpublicpolicyoneconomicactivitythecaseofpakistan AT seemazubair dynamicsofpublicpolicyoneconomicactivitythecaseofpakistan
_version_	1718444731171602432

Dynamics of Public Policy on Economic Activity: The Case of Pakistan

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