MODELING DEBT ACCUMULATION IN PAKISTAN: A SYSTEM DYNAMICS APPROACH

摘要

Based on generally accepted macroeconomic frameworkrnand using System Dynamics method we identify andrnmodel the fundamental structure of public debtrnaccumulation process in Pakistan and its two wayrnlinkages with economic growth and public finances. Ourrnobjective is to identify leverage points that may bernutilized to slow down debt accumulation process withoutrnslowing down economic growth. For this purpose wernconsider fiscal policy as the strategic element of the debtrnaccumulation process and assume that there exists anrneffective monetary policy that satisfies the objectives ofrnthe fiscal policy. We demonstrate that better debtrnmanagement will only be possible through exogenousrndebt relief along with a simultaneous endogenousrngovernment responsibility to maintain fiscal disciplinernand private sector responsibility to generate growth.