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DECISION BETWEEN PUBLIC INVESTMENT AND PUBLIC CONSUMPTION A POLICY ANALYSIS

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11 Pages : 131-152

http://dx.doi.org/10.31703/ger.2020(V-I).11      10.31703/ger.2020(V-I).11      Published : Mar 2020

Decision between Public Investment and Public Consumption: A Policy Analysis

Abstract

    This study aims to draw a policy decision between public investment and public consumption by designing a Dynamic Stochastic General Equilibrium (DSGE) model for the economy of Pakistan which is experiencing persistent shocks that have stressed the growth pattern. The DSGE model has a microeconomic foundation and justifies locus critics by envisioning an artificial economy. The model is evaluated and set to best fit for data through an exercise of moment matching. Government consumption shocks and Government Investment shocks are used to trace out the behaviour of the economy. The analysis confirms that Pakistan economy could go for capital formation through public investment but it results in compromised public consumption and structural unemployment. It is further concluded that the export base and long-run public investment programs are needed to achieve sustainable development in the economy.

    Fiscal Policy, Analysis, Public Investment, Consumption, DSGE model.

    (1) Muhammad Raashid
    PhD Scholar, Pir Mehr Ali Shah Arid Agriculture University Rawalpindi, Punjab, Pakistan.
    (2) Abdul Saboor
    Dean, Faculty of Social Sciences, Pir Mehr Ali Shah Arid Agriculture University Rawalpindi, Punjab, Pakistan
    (3) Aneela Afzal
    Assistant Professor, Department of Sociology, Pir Mehr Ali Shah, Arid Agriculture University, Rawalpindi, Punjab, Pakistan.
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Cite this article

APA

    APA : Raashid, M., Saboor, A., & Afzal, A. (2020). Decision between Public Investment and Public Consumption: A Policy Analysis. Global Economics Review, V(I), 131-152. https://doi.org/10.31703/ger.2020(V-I).11

CHICAGO

    CHICAGO : Raashid, Muhammad, Abdul Saboor, and Aneela Afzal. 2020. "Decision between Public Investment and Public Consumption: A Policy Analysis." Global Economics Review, V (I): 131-152 doi: 10.31703/ger.2020(V-I).11

HARVARD

    HARVARD : RAASHID, M., SABOOR, A. & AFZAL, A. 2020. Decision between Public Investment and Public Consumption: A Policy Analysis. Global Economics Review, V, 131-152.

MHRA

    MHRA : Raashid, Muhammad, Abdul Saboor, and Aneela Afzal. 2020. "Decision between Public Investment and Public Consumption: A Policy Analysis." Global Economics Review, V: 131-152

MLA

    MLA : Raashid, Muhammad, Abdul Saboor, and Aneela Afzal. "Decision between Public Investment and Public Consumption: A Policy Analysis." Global Economics Review, V.I (2020): 131-152 Print.

OXFORD

    OXFORD : Raashid, Muhammad, Saboor, Abdul, and Afzal, Aneela (2020), "Decision between Public Investment and Public Consumption: A Policy Analysis", Global Economics Review, V (I), 131-152

TURABIAN

    TURABIAN : Raashid, Muhammad, Abdul Saboor, and Aneela Afzal. "Decision between Public Investment and Public Consumption: A Policy Analysis." Global Economics Review V, no. I (2020): 131-152. https://doi.org/10.31703/ger.2020(V-I).11