After the 18th constitution amendment it has become important to plan provincial development strategies. When we look at provincial economies we observe vast economic and geographic differences. In this study we have studied monetary policy effects at provincial level in Pakistan. Using the time series data from1972 to 2014 and VAR model we find that Punjab and Sindh are most affected by monetary policy shocks while Khyber Pakhtunkhwa and Balochistan is not affected by monetary policy shocks. Under current institutional setup it is not possible to make monetary policy a provincial matter. On the fiscal side provinces are autonomous to much extent. Province can setup fiscal policy at their end. They should set fiscal policy in such a way that the coordination of monetary and fiscal policy minimizes these differences in effects of monetary policy among the provinces. Supervisor:- Dr. Wasim Shahid Malik