Macroeconomic policies are mainly aimed at the achievement of the basic objectives of stable prices along with sustainable and accelerated economic growth rate in an economy. Size of fiscal multiplier and the effectiveness of fiscal policy remained a debatable issue from John Maynard Keynes of thought till present volatile economic environment of the world. The state dependent variations in the magnitude of fiscal multipliers along with the fiscal policy as a stabilization tool again become most important and hot debated issue since Global Financial Cricis 2007-2008. This research study investigates the state dependent nature of fiscal multipliers for the Pakistan economy over the time period of 1980: 2015. Jorda’s (2005) local projection method (a time series VAR based model) as well as OLS with regime switching dummy is used to obtain impulse response functions and estimate the coefficients consequently to reach on desired objectives of the study. The variations in the size of fiscal multipliers are assessed under two regimes or conditions of the economy: low and high economic growth regimes. Similar to the findings of existing literature the results of the study confirm the argument that effectiveness of fiscal policy to stimulate growth in the economy enhances in the low growth period as compared to the time when growth rate is high in the economy. The findings of this study suggest that authorities can adopt the fiscal policy to stabilize the short run fluctuations in economic activity by increasing the government expenditures, as this tool of fiscal policy is more effective compared to taxes in Pakistan economy’s context especially in the times of recession. Results also recommend that in recessions and low growth regimes, government and policy making institutions can rely more on fiscal policy because during this phase of business cycle, government expenditures exert more efficacies while lower in expansions. Supervisor:- Dr. Mahmood Khalid