Asymmetric Impact Of Exports On Economic Growth In Pakistan: Application Of Nonlinear ARDL
Author: Yasir Ali

The study in hand is an empirical quest for the asymmetric impact of exports upon economic output or growth in the ELGH (exports-led growth hypothesis) setting for the particular case of Pakistan. Because of ignoring the paramount importance of widespread nonlinearities and then ruling out the intrinsic asymmetries in any analysis can invalidate or totally impair the results. The nonlinear ARDL framework of Shin et al. (2014) was successfully applied in order to achieve this end. From a policy perspective, an econometric model must be congruent as well as encompassing so that reliable conclusions related to policy responses in the data generating process (DGP) could be drawn from with confidence, so this paper focuses on to make use of asymmetric bounds test of cointegration and the framework of asymmetric ARDL to meet our purpose. The time span of annual data ranges that extend from 1974 to 2018 (45 data points of Pakistani economy) are used for our study variables, viz. exports, imports, gross fixed capital formation, domestic credit to private sector, FDI, inflation rate, and GDP. It was found from the study results that there exists an asymmetric association in the long-run among the study variables, and more specifically exports have an asymmetric impact on the growth. Further, in the long run, both the positive and the negative changes in the exports are significant at 1% level, and also having their expected signs. More importantly, the negative shocks in the exports in the long run have a more pronounced effect (almost five times greater than the positive one) on economic growth of Pakistan. As this study results propose in a nonlinear frame of reference, the decrease in the exports has a detrimental effect on the economic growth in the long run, which should be seriously considered and tackled through prompt, sound and viable exports augmentation line of action(s) by policy makers. Moreover, the results through asymmetry could be of great help for making more proficient policy and also for forecasting purposes. So, the findings justifying the view that impact of bad news is, almost, always greater than the good news or vice versa might be the case. Supervisor:- Ms. Uzma Zia, Co-Supervisor:- Dr. Saud Ahmed Khan

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Keywords : Asymmetric Cointegration;, Export led growth (hypothesis), Nonlinear ARDL, Pakistan economic growth
Supervisor: Uzma Zia
Cosupervisor: Saud Ahmed Khan

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