Impact of interest rate on economic growth in pakistan

We value your privacy. This trend would be observed from the first quarter of to the fourth quarter. Background The interest rate is considered an important factor affecting saving and investment. However, the unavailability of data, especially for certain Muslim countries, can pose a significant limitation. We recommend channelising remittances and lower barriers to business freedom, which may pave the way for a conducive investment-friendly environment. Christy and Clendinon note that the saving rate and interest rate are two important determinants of investment.

However, the long run. Once long-run association among investment, real rate of interest and income is. The results of OLS show that inflation and exchange rate has negative and significant affect economic growth of Pakistan. Luis H. Pakistan Journal of Commerce and Social Sciences 7 1 — This trend would be observed from the first quarter of to the fourth quarter.

Pakistan Journal of Commerce and Social Sciences. Inflation and Economic Growth: Evidence from Pakistan. Citations IJBM — These results are in line with the economic theory,.

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Investment, Interest rate and income are. These policies will increase saving and investment in Islamic countries, ultimately resulting in improved economic growth. We note that all the variables are positively skewed for the Islamic countries, while only gross domestic saving GDS is negatively skewed for non-Islamic countries. Lanyi and Saracoglu Hence, we exclude such countries from our study.
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Increased production. We find that a contractionary monetary policy, resulting from the oil price shocks, contributes to significant output loss in Pakistan. The PP method is based on the following statistic:. All studies confirm the r esult that the investment is inversely responding to r eal interest. The outcomes confirm economic theory and a number of other studies that investment has significantly inverse association with real interest rate in Pakistan.
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Investment is the most important element of any economy. Test estimate accordingly for all the three variabl es. Inflation and Growth: An Estimate of the. Source: Summarized and Calculated by A uthors. This article used ARDL model for the aim of examining long run as well. The value of the error.
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This property requires a pre-testing for the presence of a unit root. The outcomes showed that labor force, government expenditures, and. Acknowledgements The authors are grateful to their families and colleagues for their cooperation. J Econ 1 :1— However, the analysis found a negative relationship between real-interest rate and investment in the private sector in these economies Muhammad et al.
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However, according to Islamic teachings, riba or earning interest on saving or investment is forbidden, and thus, many Muslims try to avoid earning income from the interest rate. H 1 : Investment has an inverse asso ciation with real interest rate. Ahmed, Qazi Masood. Source: Summarized and Calculated by A uthors. Source: Summarized and Tabulated by Authors from Eviews. Hashem, Yongcheol Shin, and Richard J.
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