No abstract

The present paper has examined the role of monetary policy in mitigating the adverse supply shocks (i.e. rise in oil prices). A typical monetary policy is regarded as the stabilizing policy and it is responsible to safeguard an economy in the emergence of any negative shock from the external world. Pakistan's economy has been vulnerable to oil price fluctuations and it has often faced the long run negative impact, for instance the negative effects of 2008 commodity crises which were mainly because of the abrupt rise in oil prices. The monetary policy of Pakistan usually follows the tight policy stance as a response to such adverse supply shocks but the question always remain, how effective is it in mitigating those negative effects? In this regard, the present study has explored the effectiveness of monetary policy stance in Pakistan. In order to achieve the underline objective, this study has used the Shutdown Methodology in Structural Vector Autoregressive (SVAR) models on the quarterly data from 1992 to 2016. The results from the underline model have revealed that the monetary policy of Pakistan has a limited effectiveness on its main target variables of economic output and general price level.

This paper examines the effects of monetary policy and exchange rate shocks on the trade balance of Pakistan. Theseeffects are further investigated on the two broad categories of trade surplus and trade deficit sectors.Thisstudy has employed the Structural Vector Error Correction Model (SVECM) withalongrun and short run restrictions to identify the monetary policy shocks. The results from the SVECM are consistent with the standard theoretical expectationsi.e. free from empirical puzzles.The findings have revealed that the tradebalance deteriorates to the contractionary monetary policy shocks, providing support to the expenditure switching effects of monetary policy in Pakistan. Furthermore, the effectiveness of monetarypolicyis only limited to trade surplus sectors.On the other hand, the exchange rateshocks do not support the J-Curve effects on both the aggregate as well as disaggregate level trade balance.

In this research paper, we followed the general to specific approach for finding out the factors that determine sectoral growth in Pakistan. The objective was to see which of these factors have relevancy in explaining sectoral growth. Auto regressive distributed lag (ARDL) bound testing in coordination with the general to specific approach was applied for conducting the analysis. Results showed that foreign direct investment, inflation and remittances received that have relevancy in determining the services sector growth. The variables which have significant effect on agricultural sector growth are remittances received, gross national expenditures and inflation. External debt and domestic credit to private sector significantly determined industrial sector growth. Based on empirical results, it is recommended that relevant authorities should augment the factors that cause sectoral growth and control those factors that retard it.