Financial Structure, Misery Index, and Economic Growth: Time Series Empirics from Pakistan

摘要

This study empirically analyzes the impact of the financial structure and misery index oneconomic growth in Pakistan. We adopted Autoregressive-Distributed Lag (ARDL) for a co-integrationapproach to the data analysis and used time series data from 1989 to 2017. We used GDP as thedependent variable; the Financial Development index (FDI) and misery index as the explanatoryvariables; and remittances, real interest, and trade openness as the control variables. The empiricalresults indicate the existence of a long-term relationship among the included variables in the modeland the FD index, misery index, interest rate, trade openness, and remittances as the main affectingvariables of GDP in the long run. The government needs appropriate reform in the financial sectorand external sector in order to achieve a desirable level of economic growth in Pakistan. The miseryindex is constructed based on unemployment and inflation, which has a negative implication on theeconomic growth, and the government needs policies to reduce unemployment and inflation.