Public Sector Financial Management And Output Growth: A Case Study Of Pakistan
Author: Saima Ashraf

Financial Management in the Public sector is an essential part of the development process of the country. Public sector financial management (PFM) encompasses the collection and utilization of revenue. Financial Management Reforms are developments and changes over time in the field of finance. In this context, the objective of this study is to explore the impact of public financial management on output growth in case of Pakistan. This study also investigates the effect of public sector financial reforms (implemented in 1990s) on GDP, which is the proxy of output growth. Tax reforms included in this study to show a structurally different tax pre and post. The time series data covering the period from 1977 to 2015 has been taken in this study. Econometric methodology includes Unit root test, Causality test, Two Stage Least squares (2SLS) and Generalized method of moments (GMM). There exists endogeneity in our model. Therefore, we used Two Stage Least squares (2SLS) and Generalized method of moments (GMM). There is existence of the reverse causation between the variables which shows that the change in domestic and external debt show bilateral causality with output growth. The results of 2SLS and GMM show that PFM put a promising impact on the output growth. In this regard, domestic debt positively and external debt is negatively associated with the output. The government spending on social services, community services and economic services put a positive impact on the economy. On the other hand, government expenditure on administration, defense and transfer of payment are resulting in decreasing output. There is a positive relationship between financial reforms and economic performance. Supervisor:- Dr. Ahsan-ul- Haq Satti

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Supervisor: Ahsan ul Haq Satti

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