This study empirically investigates the relationship between public and private investment in Pakistan at the aggregate and sectoral level, including the sectors of Agriculture, Manufacturing, Finance, Construction, Transport & Communication and Mining & Quarrying. For this purpose, annual time series data is utilized from 1971 to 2019 except for the Agriculture sector covering the period of 1981-2019 as data for previous years is not available from any published sources. Multivariate co-integration approach and ECM are employed to empirically analyze the existence of long-run and short-run association among public and private investment. The results indicate a long run complementary type relationship of public investment with private investment at both the aggregate and sectoral level except for the Finance sector. The short-run analysis supports this long-run positive association at an aggregate level and four sectors, excluding Transport & Communication and Agriculture sector where the results were insignificant. Our results and generally declining share of public investment highlight that the government is playing its role as an “enabler” (or facilitator) of private investment in terms of association between public and private investment.
This paper analyses the impact of remittances on human capital through the interaction of exchange rate in Asia. There is considerable debate regarding the relative contribution of international migrant’s remittances to sustainable economic development. Remittances are considered as temporary income. If exchange rate remains stable, then remittances will help in curtailing income hurdles of households as well as for government and helps to increase investment in education. Investment in education increases skill level of labor force and create an environment for long term growth. We use panel data of 54 Asian countries for the period of 1980-2020 and employ Hausman test and percentile analysis. The paper concludes that remittances have a positive and significant impact on human capital. However, the substituting relationship of remittances and exchange rate is observed in stimulating human capital in Asian countries. The developing countries having low growth, when exchange rate is overvalued (appreciate), it is not only pushing the economy further toward slower growth due to decrease in foreign competitiveness, increase in the current account deficit and increase unemployment but also cause to decrease main source of earning remittances growth in these countries. Therefore, this study suggests that the government of developing country implements such policies that helps in the stabilization of their currencies (manage floating exchange rate).
Environmental pollution is the key concern of today’s world. Being a developing country, Pakistan is not exempted from world pollution as carbon dioxide emissions are increasing continuously. This study empirically investigates the factors effecting CO2 emissions focusing on the role of vertical intra-industry trade and Bilateral FDI of USA, UK and China with Pakistan from 1981 to 2018. ARDL bounds testing method is used to investigate long run relationship among the variables of interest. The vertical intra-industry trade is calculated by using the threshold method. The stationary properties of the variables are examined by applying the Augmented Dicky-Fuller and Phillip Peron unit root test. Robust OLS regression is analyzed for the model of USA and Pakistan. Results indicate a positive impact of bilateral FDI with USA but it is insignificant for UK and China. Energy use and Real GDP are significantly positive. Conversely, vertical intra-industry trade is negative for USA and positive for China. These overall findings validate the pollution haven hypothesis in Pakistan and also confirm the Environment Kuznets Curve (EKC) hypothesis. The government should impose adequate environmental policy for all the multinational corporation (MNC’s) on equivalent basis.
This study's main objective is to estimate the long-run relationship between exchange rate and monetary fundamentals by using annual balanced panel data of eight selected emerging and developing Asian countries. We employed a panel cointegration methodology to estimate the exchange rate cointegration connection among monetary fundamentals by using annual balanced panel data of eight selected emerging and developing Asian countries such as Pakistan, China Mainland, Sri Lanka, Thailand, Indonesia, Malaysia, Philippines, India for the period of 1998-2016. The results concluded that the exchange rate has a cointegration connection with monetary variables (money supply, GDP real index, GDP deflator, producer price index. Further, the Granger causality test supported the money model by explaining that emerging and developing countries' currencies exchange rate converges towards long-run equilibrium. Therefore, we concluded that in emerging and developing Asian countries, the performance of the nominal exchange rate is comparatively better, as suggested by the monetary model.
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