This study examines the behavioral aspect of Pakistan’s energy crisis by comparing electricity consumption in the public and private sectors. Specifically, we compare consumption patterns of electricity across a sample of student hostels at two public sector universities and privately run student hostels. In addition, we collect household data for a sample of students at Quaid-i-Azam University (QAU) in Islamabad and compare their average electricity consumption with that of the public sector university hostels. We find that the latter’s average consumption of electricity is significantly higher than among private hostels and households. In assessing the moral hazard problem of the public sector in this context, we test the energy conservation behavior of QAU students and the university administration. The results show that students are largely indifferent to conserving electricity, while the administration pays little attention to the use of energy-efficient lights and equipment.
Foreign exchange reserves have clear implications for exchange
rate stability, financial markets, and hence, for overall economic
activity. Stakeholders have different views about reserves holding. Some
economists believe that foreign exchange reserves are useless and
unutilised as Friedman (1953) criticised the fixed exchange rate system
with the argument that it contains unutilised foreign exchange reserves.
On the other hand, some economists argue that foreign exchange reserves
should be there to smooth out the imbalances in balance of payments [see
Kemal (2002)]. There is continuous debate about the need to hold
reserves.1 The critics are worried about the cost of holding reserves.
The cost of holding reserves is the investment that nations must forego
in order to accumulate reserves. In contrast, the supporters of reserves
holding argue that the cost of reserves holding is small compared to the
economic consequences of exchange rate variations. For instance, a
depreciation in the value of the currency, caused by either financial
crises or others internal or external shocks, may raise a country’s
costs of paying back debt denominated in foreign currency as well as its
costs of imported items. Besides, it also creates high inflation
expectations.
Volatility in discretionary public spending has diverse
implications for the overall economic performance of economies. In this
study, we examine the impact of volatile non�systematic discretionary
public spending on economic growth. By employing cross-country data of
74 developed and developing economies, we find that volatility in
non-systematic discretionary public spending has an adverse impact on
economic growth. In particular, such impact is severe in the case of
less developed economies. Our findings are robust to the problem of
endogeneity. In order to ensure the accuracy of the results, we conduct
sufficient sensitivity analysis by incorporating a bunch of potential
control variables. In most of the cases, the results with regard to the
policy volatility remain intact. This suggests that effective spending
rules, i.e. permanent numerical limits, should be imposed on budgetary
aggregates to restrain governments from the volatile use of
discretionary spending. JEL Classification: H3; H5 Keywords: Volatility
in Discretionary Public Spending, Economic Growth, Effective Spending
Rule
This study examines the impact of the 2008 global financial crisis on economic growth and employment in Pakistan. We conduct a time series analysis of quarterly data for 1997–2011, applying the autoregressive distributed lag bounds-testing approach and an unrestricted error correction model. Our analysis suggests that the impact of the crisis was transmitted primarily through two channels—the financial sector and trade—with a corresponding negative effect on economic growth and employment. Of the two channels, the magnitude of the trade effect is larger than that of the financial sector.
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