Volume 9 Issue 1 2013


Sidrat Jilani
Dadabhoy Institute of Management Sciences

Farooq-E-Azam Cheema
Department of Business Administration Bahria University, Karachi, Pakistan.

Muhammad Asim
Karachi University Business School

Abstract This research work explores the impact of macroeconomic variables like inflation, real exchange rate, and interest rate on GDP of Pakistan in the light of 32 years data, for 1980 to2013. Methodology/sample-Research was secondary data-based, and multivariate regression analysis was used to analyze the data. The econometric model used for analysis consisted of GDP as a dependent variable while the independent variables were interest rate, exchange rate, and inflation rate. Data was taken for these variables from the website of the State Bank of Pakistan and World Bank. The individual significance of the variables, overall significance, and goodness of fit of the econometric model was analyzed. The study found that there is a significant impact of inflation, interest rate, and exchange rate on GDP. As far as the signs of co-efficient are concerned, inflation and interest rate had a negative relation with GDP while interest rate possessed positive relation with GDP. Based on results and its analysis it is recommended that The government adopted a tight monetary policy to reduce inflation as the results indicate that inflation has a significant but negative impact on GDP. In the case of developing counties like Pakistan high value of the real exchange rate should be maintained because results show that there is a significant and positive impact of the exchange rate with GDP. The ceiling of interest rate should be removed to boost the economy.
Keywords GDP (Gross Domestic Product), Inflation, Rate of Interest and Exchange rate.
Year 2013
Volume 9
Issue 1
Type Short Report
Recognized by Higher Education Commission of Pakistan, HEC
Category "Y"
Journal Name IBT Journal of Business Studies
Publisher Name ILMA University
Jel Classification -
DOI http://dx.doi.org/10.46745/ilma.jbs.2013.09.01.04
ISSN no (E, Electronic) 2409-6520
ISSN no (P, Print) 2416-8393
Country Pakistan
City Karachi
Institution Type University
Journal Type Open Access
Manuscript Processing Blind Peer Reviewed
Format PDF
Paper Link http://ibtjbs.ilmauniversity.edu.pk/journal/jbs/9.1/4.pdf
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