Lucrative Role of Macroeconomic Variables on Economic Growth of Pakistan

Abstract

This study is an addition to the research that examines how macro variables contribute to Pakistan's economic growth. The research showed the influence of the exchange rate, inflation, expenditure by the government, unemployment, and population growth on Pakistan's economic growth data (1985 to 2020) collected from the World Data Bank. The inflation rate, government expenditure, economic development, exchange rate, and unemployment are stationary on the first difference. In contrast, according to unit root ADF, population growth is fixed on both levels and 1st difference. ARDL explored the long/short-run relationship among variables. All independent variables have a significant impact on economic growth. Government expenditure positively correlates with Pakistan's economic growth, but Inflation and unemployment have a negative relationship with that growth. Policymakers, regulators, stakeholders, and fund managers may enjoy a safer flight in investment decisions. They can take positive guidance from macroeconomic variables' impact on Pakistan's economic upturn.