Political Instability and Private Investment, Time Series Analysis in Case of Pakistan
Author: Jawad Ahmed Qureshi

Investment is most important determinant of economic growth and political instability is major constraint in its way, both in short and long run economic periods and for both developing and developed economies. In the way, private investment serves as only key in highly indebted developing economies for physical and human formation while political stable environment acts as fundamental catalyst and process necessary to achieve this investment. Therefore, this study searches the impact of political instability on private investment (Pvt I) in Pakistan by employing annual time series data for the period 1984-2016. Econometrical proofs of Auto Regressive Distributive Lag model (ARDL) for private investment have been obtained through estimations on E-Views. Findings of the study reveals that political instability negatively drives private investment in Pakistan, both in short and long run economic periods. Empirical result in study further confirms that financial market development significantly promotes the private investment, whereas real effective exchange rate and public investment have significant negative relationship with private investment (i.e. gross domestic fixed capital formation). Furthermore, it is found that public debt and real interest rate also have a negative impact on private investment but they have insignificance in the case. Study recommends that government have to take initiatives to promote private investment in Pakistan through creating stable political settings in the country and this stability depends on the growth and development of institutions. Supervisor:- Dr. Karim Khan

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Keywords : ARDL, E-Views, Financial Market Development, Political Instability, Private Investment, PUBLIC DEBT, Public investment, Real Effective Exchange Rate, Real Interest Rate
Supervisor: Karim Khan

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