Papers for Forthcoming Issues

1- Knowledgement sharing practices on performance: A role of intellectual capitals practices
by Wasimur Rehman and Nabila Asghar

Abstract
This study seeks to empirically investigate the relationship of knowledge sharing (KS) practices, intellectual capital (IC) practices and performance within the banking organizations in Pakistan. This study uses the amended instrument and attempts to collectthe data from 810 middle level managers through questionnaire from a sample of 42 banks. Structural equation model (SEM) and confirmatory factor analysis (CFA) were applied to assess the nature of relationship and overall fitness of the measurement models among the constructs. The results of confirmatory factor model reveal that all the indices satisfactorily meet the thresholds which indicatea well fit of the models. Although, results of standardized path coefficient postulates thatKS and ICpractices significantly contributes to banks’ performance, moreover results of standardized path coefficients reveal that human capital, structural capital and relational capital practices partially mediate the relationship between KS driven performance The findings of study support that all the proposed hypotheses are statistically significant (p<0.001) which indicate that IC practices substantially mediate the relationship between KS driven performance, thus corroborating the argument that IC is a valuable strategic resource to leverage the performance based activities.

2- Packaging decision in horticulture sector of Khyber Pakhtunkhwa province of Pakistan
by Muhammad Shahzad, Ayesha Tahir and Naveed Jehan

Abstract
Packaging technology play an important role in the marketing of horticultural produces. In Pakistan, mostly wooden and cardboard boxes are used. This study was undertaken to carry out benefit cost ratio and determine the factors affecting adoption of cardboard carton. Sample of 122 respondents was selected through proportionate random sampling. Benefit Cost Ratio of the two packaging technologies were compared through paired t- test while probit estimates were carried for adoption of cardboard carton. Adopters of cardboard carton obtained price premium of 45 % and BCR of 4.56 as compared to 3.49 of wooden box users. Probit estimates with marginal effects revealed that orchard size, destined market distance and availability in different sizes of the boxes could increase the probability of adoption.  Experience and cost were considered to be the significant factors for non adoption of cardboard packaging. In order to increase the adoption of cardboard packaging, it should be modified for mechanical strength, storage environment and be made available in different sizes.

3- The role of infrastructure in promoting the domestics investment in Pakistan
by Abida Yousaf and Naila Erum

Abstract
Infrastructure is an umbrella term for many activities as it plays vital role for the industrial and overall economic activities. The study examines the historical trends of GDP, infrastructure, investment in Pakistan.  The study, than, empirically investigates the impact of infrastructure on domestic investment in Pakistan form 1975-2013. The variables included in the study are gross fixed capital formation, telephone lines, length of roads, inflation, GDP and interest rate and applied ARDL model for estimation of empirical results. The results found that the impact of infrastructure on the domestic investment has positive and significant. However, telephone lines variable remains insignificant during long run while it is significant in the short run.  The study also finds positive and significant relation between domestic investment and GDP. The impact of interest rate and inflation is negative and significant during short run on domestic investment But, the impact of inflation remains insignificant during long run. The findings suggest that special attention should be paid towards infrastructure along with other variables while formulating investment policies.

4- Impact of trade liberalization on economic growth and poverty in South Asian region
by Waqar-Un-Nisa, Naeem-ur-Rahman and Aliya H. Khan

Abstract
This paper assesses the impact of trade liberalization on economic growth and poverty in South Asian region in the light of the reinforcement of the basic objectives of “General Agreement on Tariffs and Trade” (GATT). For the purpose seven South Asian countries are selected namely Pakistan, Bangladesh, India, Sri Lanka, Maldives, Nepal and Bhutan. The study period has been divided into pre and post liberalization from 1960-1995 and from 1996-2014. Economic growth and poverty equations are separately estimated with Fixed Effect Model on panel data. Results show a significant positive impact of openness of south Asian countries and specifically signifies the role of Bangladesh in case of growth and and India in case of poverty in the region. Gini (income inequality) of individual countries worsens average income growth and poverty situation of South Asia region but specifically highlights a prominent role of Bangladesh and Bhutan in reducing growth while Bhutan and India in raising poverty of the region. Unemployment policies of all South Asian countries, specially of India and Bangladesh worsening the economic growth as well Pakistan and Bhutan worsening poverty situation of the region greatly. During both period economic growth shows a positive impact over poverty of the region. Nepal and Pakistan have a leading role in this context. Results are mostly significant but weak share of the factors emphasizes the adoption of effective pro-poor growth policies along with openness policies according to the specific requirement of the concerned economies.

5- Welfare implications of alternative policy option: Analysis of wheat market in Pakistan
by Momena Abdur Rehman, Khalid Mushtaq, Abedullah and Faisal Abbas

Abstract
The objective of this study is to analyze the impact of the alternative food policy options adopted in the wheat sector in Pakistan on the welfare of consumers, producers, government revenue, and foreign exchange requirements. In order to estimate the consumer and producer surpluses/losses, it requires supply and demand elasticities of wheat and demand elasticity of fertilizer. These elasticities were calculated by estimating supply and demand functions of wheat and demand function of fertilizer using co-integration and error correction techniques. However, partial equilibrium model has been used for welfare policy analysis which indicates that input subsidy gives net return to the society while import and price support generates net losses. Combined policy option generates the highest net return to the society when input subsidy and price support are combined in the ratio of 90 and 10 percent, respectively. Such comparison would help policy makers in making optimal allocations of scarce resources.

6- Economics of globalization: An approach towards inclusive growth for developing nations
by Rukshanda Koser, Saima Sarwar and Wasif Siddiqi

Abstract
The study aims to explore the role of various dimensions of globalization i.e. political, economic and social globalization using the time span 1991-2013 in relation to inclusive growth. Using Fixed Effect Model, the results showed that the overall impact of globalization is mix for developing nations i.e. On the one side it is reducing poverty while on the other side it is not proven as the employment-driven-strategy for the economic growth of developing nations. Treating individually the impact of each dimension of globalization on these two measures of inclusiveness, only role of political globalization is being observed consistent and improving both poverty and employment conditions in developing countries suggesting that information flow, personal contacts, cultural proximity and role of embassies for facilitating other nationals to have access into world market is contributing towards inclusive growth. Impact of economic globalization is confusing due to its positive effect on poverty but it is being proved healthier for employment generation. All these findings help to make conclusion that developing nations should not solely depend on this strategy of development rather an amalgam of both localization and globalization should try to be followed.

7- Returns volatility in stock market and performance of banks: Evidence from Pakistan
by Saiful Rahman,  Abdul Rashid and Muhammad Ilyas

Abstract
Irregular behavior of stock market affects each sector of economy but financial sector is the most vulnerable. The study attempts to examine the impact of stock market returns’ volatility on the performance of banking sector in Pakistan. Two mail hypotheses are constructed to achieve the objectives of study i.e. (i) There exists a significant relationship between the returns volatility in stock market and banking performance in Pakistan, (ii) Bank size has a significant role in establishing the volatility-performance relationship. Two step GMM system estimator is used to test these hypotheses. The results reveal that the stock market volatility has a significant negative impact on return on equity and return on assets, and bank size has a significant negative impact on the volatility-performance relationship. Specifically, the results suggest that in the time of high volatility, banks’ profitability starts to decline, but this profitability decline is not same for all size of banks. The negative impact of volatility for the larger banks is low.

8- Efficiency analysis of public transport in Lahore
by Nimra Noor, Bilal Mehmood and Maryam Wasif

Abstract
Public transport has been a focus of financial allocations in Pakistan. The efficiency of performance of these projects should also be brought under consideration. Accordingly, this paper focuses on the resource allocation and its impact on Lahore Transport System by estimating the efficiency and productivity of the franchise based bus services on 15 selected urban public bus routes of the Lahore city. Data of inputs and outputs is used from July-2013 to Mar-2014. Using data envelopment analysis, the study finds relative technical efficiency scores of different routes and total factor productivity (TFP) under the first stage DEA.  Further under the second stage DEA analysis route wise targets and slacks of inputs and outputs are examined. The results imply that the public transport sector of Lahore is performing satisfactorily, mainly due to the improved managerial efficiency and technological changes. At the end recommendations have also been made based on this empirical work.

9- Role of microfinance in poverty alleviation in rural areas of district Sargodha, Pakistan
by Ahmed Raza Cheema and Rajinder Parkash

Abstract
This study calculates headcount ratio andanalyzes the impact of microfinance issued by the Punjab Rural Support Programme (PRSP)usingthe Multiple Ordinary Least Squares (OLS) regressionin the rural areas of District Sargodha Pakistan. The study estimates the Multiple Ordinary Least Squares (OLS) regression using the primary data. The results depict that headcount ratio was 56.7 % before, butit reduces to 14.1 % after getting microfinance. The resultsof OLS regression show that microfinance plays an important role in poverty reduction.The results also reveal that poverty is inversely related with number of earner and level of education, whereas it is positively associated with household size. At a policy level, it is suggested that micro finance should be provided to the poor at the least interest rate. Government should also manage maximum job opportunities and education especially for the poor. It should also focus on family planning awareness to control household size especially among the poor.

10- Corporate social responsibility and cost of equity; mediating role of financial performance
by Muhammad Ishaq and Ch. Mazhar Hussain

Abstract
This research study aims to investigate the relationship between corporate social responsibility and cost of equity with financial performance as mediator. The sample of the study comprises of 100 firms listed on Karachi Stock Exchange. The period of the study ranges from 2005 to 2014. Panel regression techniques have been used to carry out this research. For mediation analysis bootstrapping technique is used. The results of bootstrap test show that financial performance does not mediate the relationship between corporate social responsibility and cost of equity. Overall the results of the study suggests that the corporate social responsibility is still in its infancy stage in Pakistan and there is a need for civil society, business and government to create mass awareness about corporate social responsibility.

11- Hedonic price approach: Testing relationship between quality attributes of mutton and its prices in Faisalabad City, Pakistan
by Abdul Ghafoor, Shahzad Rafique and Asghar Ali

Abstract
This paper attempts to analyze the impact ofmajor factors affecting consumers’ perceptions about market prices of mutton employing hedonic price approach and using primary sources of data.A representative sample of 80 mutton consumers was selected using stratified random sampling technique.The impact of major factors on mutton prices was analyzed by employing multiple regression analysis.The value of R2 was 0.60 whereas the F-value was 12.78. The findings of analysis reveal thatfreshness, hygiene, fat contents and condition at retail level are the significant variables affectingconsumers’ perceptions about prices of mutton whereas the variable (stamp of abattoirs) shows insignificant impact. It is suggested to ensure the hygienic conditions and quality of mutton by developing mutton value chainsequippedwith proper slaughtering and mutton management practices. It is further suggested to enforce rules and lawsto ensure fair prices and quality of mutton in the city.

12- The determinants of services sector growth:  A cross country analysis
by Dr Javed Iqbal and Muhammad Salam

Abstract
Many of the developing countries not at all have comparative advantage in manufacturing; the services sector thus serves to be a potential avenue for economic transformation and economic growth. The exiting literature related to service sector focuses mainly on advanced economies. Less attention has been given to the services sectorwhich  is supposed to play a role in the economic growth of developing economies. The current study is a comparative analysis of selected developed and developing economies in order to identify the major determinants of services sector growth in these economies. For estimation purposes, the current study uses both static as well as dynamic panel data estimation techniques. The findings of the study indicate that in both developed and developing countries, GDP per capita and FDI play a significant role in growth of services sector, while trade openness tends to affect the services sector growth negatively.  Productivity differential does not have any significant impact on growth of services sector in both samples of countries. In case of developing economies, innovation has significant effect on services sector growth in developing countries only. In order to check the sensitivity of the results, we also have examined the effect of these explanatory variables on services sector growth in interaction with other variables, interestingly, the results support and confirm those without interactive terms.

13- Trade revenue implications of trade liberalization in Pakistan
by Khalil Ahmad, Safdar Ali and Amjad Ali

Abstract
This study attempts to investigate the effect of free trade on trade tax revenue in case of Pakistan during 1972-2014. For time series analysis, Auto regressive Distributed Lag (ARDL) model has been used for examining the long run co-integration among the variables and Vector Error-Correction model is used for short run dynamics of the variables. The empirical results show that quantitative trade restriction is positively linked with trade tax revenue. On the basis of empirical findings, this study suggests that trade liberalization has negative impact on trade tax revenue. We improve the volume of average tariff rate; it may cause to increase the trade tax revenue for Pakistan in both short run and long run.

14- Foreign trade pattern of Pakistan
by Nazia Gul and Imtiaz Ahmad

Abstract
This study investigates the overall trade pattern of Pakistan while using gravity model approach. The study has applied panel dataset for 10 major trading partners of Pakistan for the period 2005-2015. Our analysis is based on Panel data for which we have estimated Pooled OLS, FEM and REM while taking different assumptions. The empirical results are found to be consistent with the basics of gravity model as the study indicates positive relationship between the economic size, level of development and trade and negative relationship between the distance and trade. Overall results indicate that Pakistan needs diversification both in markets and products. It also needs to enter into new trade agreements with an aim to explore new markets so that it could then be able to reap the benefits of trade at the fullest.

15- Foreign remittances and sources of economic growth: Evidence from Pakistanoreign trade pattern of Pakistan
By Saeeda Bano, Faiza Azhar Khan and Tahir Mukhtar

Abstract
The present study aims at analyzing the impact of foreign remittances on sources of economic growth, namely physical capital, human capital and total factor productivity (TFP). There has been substantial literature related to the impact of foreign remittances on economic growth for Pakistan but there has been dearth of literature related to the impact of foreign remittances on sources of economic growth. The study covers the time span 1972-2013 has been used and it has employed three estimation techniques, namely, the OLS, the FMOLS and the GMM to execute empirical testing. Results indicate that foreign remittances significantly contribute in building physical and human capital of the country along with improving the TFP.

16- Informal Employment in Pakistan: Survivalist or Structuralist?
By Nadia TAHIR* and Pervez TAHIR**

Abstract
This paper examines the increasing informality in Pakistan accompanying the fluctuating industrial growth in the wake of economic liberalization. The percentage distribution of labour in informal employment by major industry divisions is used as a proxy for the informal sector.  A dynamic panel data model is constructed to analyze cyclicality and industry layering of informal employment. It is found that a declining tariff rate increases informality, confirming the structuralist hypothesis. There also exists a static subset that is marginal and growth-retarding. The results imply a structured and targeted policy for each subset to deal with the undesirable features of informal employment.

17- Formal and informal threats and information: evidence from a field experiment
by Karim Khan and Anwar Shah

Abstract
Applied research in economics is mostly based on information which is provided by a heterogeneous set of economic agents. However, such information may not reflect the true preferences of agents. In order to highlight this issue, we conduct a field experiment which comprises a fund-raising campaign for helping the needy students. We take pledges from students in different treatments; and ask them to deposit their pledges by a specific date. Our results show two important findings. First, we find that the deposited amount is significantly less than the pledged amount in all of the treatments. Second, the introduction of formal and informal threats reduces the amounts of both the average and total pledge. Alternatively, threats incentivize individuals to make only realistic pledges. Thus, people don’t reveal true preferences when they are asked about the same things in different circumstances. In particular, in the absence of formal or informal threats, the individuals have no incentive to reveal their true preferences. Our analysis has an important implication for applied research like willingness to pay for alternative commodities, construction of survey-based indices, perception surveys etc. For instance, it suggests that careful analysis should be taken before any policy decisions on studies related to these aspects.

18- The interaction of women empowerment and household wealth for child health-care in Pakistan
by Rana Ejaz Ali Khan,Tasnim Khan and Shakeela Bibi

Abstract
It is presumed that woman empowerment and household wealth improves the health-care of households. It may be argued that in the absence of sufficient household wealth the woman empowerment cannot operate for household health-care. The current study focuses to detangle the issue of role of woman empowerment in child health-care for varying wealth statuses of the households. Empirically it is investigated by using Pakistan Social and Living Standard Measurement survey 2011-12. The child health-care is measured by the number of vaccinations received by the child as a categorical variable. Woman empowerment is measured by an index constructed by woman decision making regarding purchase of basic necessities of household, medical treatment, and recreation and travel. Household wealth is measured by wealth quintiles generated from a set of household living conditions by principle component analysis. The results of ordered logistic regression revealed that high woman empowerment in low wealth quintiles show positive impact on child health-care. It may be inferred that woman empowerment enhances the probability of child health-care irrespective of household wealth status. There is no role of household wealth in the impact of woman empowerment on child health-care. In the control variables, male sex of child, mother’s education, female headship of the household, prenatal-care taken by the mother, urban locality of the household and wealth status of the household increase the probability of child health-care in Pakistan.

19- Capital Account Liberalization, Institutional Quality and Inflation Dynamics: The Case of Pakistan
by Abida Yousaf and Tahir Mukhtar

Abstract
Price stability is considered as an essential component of macroeconomic management of an economy because higher inflation rate is harmful for various sectors of the country. The main objective of this paper is to investigate the dynamics of inflation in the presence of capital account liberalization and institutional quality variables for Pakistan. The study covers the time period from 1984 to 2015 and employs the ARDL estimation technique to estimate three different specifications based on the trade liberalization and institutional quality measures. The long run and the short run estimates of different specifications reveal that the model which incorporates the institutional quality measure along with the capital account liberalization index can best explain the inflationary process in Pakistan. Moreover, growth rate of money supply and the real effective exchange rate are proved significant contributors of inflation in Pakistan. Whereas, capital account liberalization, trade openness, per capita GDP and the institutional quality index are statistically significantly reduce inflation in the country. The study suggests that along with opening of capital account, the government should also ensure stability of institutional quality measures law and order, democratic accountability, transparency and government stability in the economy to control inflation rate. Furthermore, the policy makers should take proper cautionary measures for controlling the growth rate of money supply.

20- Factors Determining Economic Growth in Pakistan: An ARDL bound testing
by Muhammad Ajmair, Muhammad Akram Gilal, Sohail Farooq and Khadim Hussain

Abstract
This empirical paper followed general to specific approach for finding out relevant macroeconomic variables affecting Pakistan’s economic growth. Annualized data between 1976 and 2014 and auto regressive distributed lag was employed for conducting the analysis. Main findings of the study are that consumer price index, gross fixed capital formation, gross national expenditures, remittances and credit extended to private sector have importance from growth perspective. Gross fixed capital formation and remittances are positively associated with economic growth of the country. Consumer price index, gross national expenditures and domestic credit extended to private sector hamper long run growth process. Based on empirical findings, it is recommended to relevant authorities to augment gross fixed capital formation, attract foreign remittances, control inflation, reduce government expenditures and alleviate government intervention in financial market for achieving long run economic growth.

21- Money-Income-Price Nexus: Explaining the Role of Black Money
by Abdul Rashid and Abdul Mansoor

Abstract
The main objective of this study is to examine the short-run and the long-run causality between money, income, and prices in Pakistan by taking into account the black economy, which is the hidden part of the total economic activities in the country. We apply the Autoregressive Distributed Lag (ARDL) model on annual data covering the period 1980-2012to examine the level relationship (cointegration) between the underlying variables. We find that there is a significant level relationship between the variables for both price and income equations, whereas, we do not find any significant evidence of the existence of level relationship in the money-supply equation. The short-run causality analysis provides evidence of bi-directional causality between money supply and income. Our results suggest that although the view of both Monetarists and the Keynesian holds in the short run, in the long run, only the Monetarists’ view holds in Pakistan. This piece of evidence is of particular interest to policymakers.

22- Real wellbeing of the ummah and economic performance: Islamic perspectives and empirical evidence
by Tariq Majeed

Abstract
This study provides insights into real wellbeing of the Ummah using Islamic perspectives and empirical evidence. Islam places justice at center in economic interactions. In Islamic teachings justice is a prerequisite for human wellbeing and all round economic development. IbnKhaldun’ has devoted a whole section on justice entitled: “injustice triggers the destruction of civilization”. Nevertheless justice cannot be fully realized without Asabiyyah which is also referred as “social solidarity”, “group feeling” or “social cohesion”. This study focuses on social solidarity to determine its casual links with economic performance of the Ummah. The study employs a comprehensive measure of social solidarity of a society that is based on three indices which are social cohesion, interpersonal safety and trust and civic activism. Our study finds out that social solidarity plays a positive and significant role in determining economic performance of the Ummah. This finding of the study is shown to be robust to different control variables, different specifications, econometric techniques and outliers.

23- Tolerance and globalization: An empirical analysis
by Dr. Muhmmad Tariq Majeed and Shamsa Kanwal

Abstract
This study investigates whether globalization plays any role to induce parents’ willingness to teach and instill tolerance in their kids. To study this relationship, we used survey measure from World Values Survey (2014) for tolerance by using Panel data in a sample of 88 countries, spanning over 1980-2014.This paper uses a comprehensive measure of globalization (KOF Index) which comprises economic, social and political dimensions of globalization. Random effects method is used to estimate parameters on the basis of Hausman test. Besides, to deal with endogenous nature of globalization, system GMM is used. Our main findings are:(i) overall globalization strengthens parents’ willingness to instill tolerance; (ii) two out of three sub-categories of globalization, economic and social globalization, drive same results while political globalization could not show any significant result in baseline findings; (iii) we also find that globalization affects values like tolerance in developed economies positively while reverse holds for less developed economies (LDCs). Our baseline results are robust to other determinants of tolerance.

24- Health outcomes of social inclusion: Empirical evidence
by Tariq Majeed and Rabia Liaqat

Abstract
This study attempts to provide a comprehensive and deeper understanding of the relationship between health and social inclusion using both cross-sectional and panel datasets covering 180 countries spanning over 1990 to 2014. Fixed effects method is used to estimate parameters on the basis of Hausman test. Besides, to deal with endogenous nature of social inclusion Two Stage Least Squares (2SLS) and system GMM are used in cross-sectional and panel data, respectively. In this study four comprehensive measures of social inclusion namely cohesion, association, safety and trust and gender equality are used. Health is measured by life expectancy at birth and infant mortality rates. This study confirms that social inclusion has a favorable effect on health. We discover that not all proxies of social inclusion are equally important in determining health status, their impact vary according to health proxy and econometric technique used. Our main results (system GMM) are robust, to alternative proxies of health and social inclusion and to other determinants of health. This study suggests that programs to improve population health should not focus only on policies which foster economic development but also on policies which tend to increase social inclusion.

25- The relationship between bank capital and liquidity creation: a disaggregated analysis of banking industry off Pakistan
by Dr. Saima Sarwar and Dr. M. Wasif Siddiqi

Abstract
This study aimed to explore the impact of bank capital on liquidity creation in Pakistan by using the dataset of all scheduled banks of Pakistan under State Bank of Pakistan from 2004 to 2013. The analysis is based on various classifications of the bank i.e. overall, small, medium and large. Using Generalized Lest Squares (GLS)model, the results show positive relationship between desired variables for large banks and negative for small banks and medium banks. Hence these findings confirm that the hypothesis of “risk absorption” effect dominates for large banks and “financial fragility” hypothesis governs in case of small and medium size banks. Moreover, bank liquidity is positively related with bank governance measures and negatively with bank size variable. On the other hand, bank risk measures are positively connected with liquidity creation. On the basis of the findings, this study suggests that if the regulatory authorities set higher capital requirements for banks, this may result in greater liquidity creation by the large banks but can restrict the liquidity creation by small banks.

26- Role of Domestic Demand in the Development of Export Supply from Pakistan: An ARDL Approach
by Syed Irshad and Ummad Mazhar

Abstract
Traditionally, export supply is modeled as a function of production capacity, cost, and prices. However, these factors are not able to fully explain the export performance. The present study includes the domestic demand pressure as an additional explanatory variable in the traditional export supply model to evaluate its empirical importance for modeling export supply for Pakistan. Using autoregressive distributed lag (ARDL) model (bound testing) on annual data over the period of 1971 to 2014, the results confirm that domestic demand pressure has a negative and significant effect on the supply of aggregate, primary and manufactured exports in both long- and short-run periods. However, the short-run coefficients of domestic demand are much greater in magnitude in all three cases, implying that changes in domestic demand havea larger effect on export growth in the short-run. Finally, the study concludes that along with traditional factors, the domestic demand pressure is also relevant for modeling export performance of Pakistan at both aggregate and disaggregated levels.

27- Political Institutions and Economic Growth: A Case Study of Selected South Asian Nations
by Muhammad Tariq Majeed and Noman Ahmad

Abstract
This study contributes to the empirical literature on regional economic performance by analyzing the role of political institutions in explaining economic growth of selected South Asian economies. The empirical analysis is based on panel co-integration techniques and the model used is an extended version of Solow-type model including an additional variable of human capital. The empirical findings broadly suggest that political institutions have critical role in explaining economic performance of the region as they significantly impede regional growth at lower levels. Nevertheless, political institutions significantly promote regional growth at higher levels. Thus, it is high quality of political institutions which can ensure long-run regional performance. This finding remains robust to different specifications and additional controls.

28- Macroeconomic Uncertainty and Domestic Investment: Evidence from Developing Countries
by Zainab Jehan and Noor Us Saba Muneeb

Abstract
Developing countries experience a high extent of macroeconomic uncertainty and instability. The governments of the developing countries implement a variety of policies in order to achieve the macroeconomic stability but regrettably, even today the macroeconomic insecurity and instability is much higher in the developing countries as compared to the developed countries. This research is conducted to empirically analyze the impact of the internal economic shocks (GDP volatility and inflation uncertainty) and external economic shocks (exchange rate volatility and TOT volatility) on the level of domestic investment in developing countries. We have used panel data comprising of 63 developing countries for the time period 1970-2013. The volatility of GDP, inflation, exchange rate and terms of trade is computed by using AR(1) models, whereas, instrumental variable approach was is employed for empirical estimation. The results show that all the measures of macroeconomic uncertainty adversely affect the level of investment. Moreover the external economic shocks affect the level of investment more strongly as compared to the internal economic shocks. The other determinants of investment are also found to have a significant impact on the domestic investment level except interest rate.

29- Growth and National Debt with Imported Goods, Tourism, and Public Good
by Wei-Bin Zhang

Abstract
This paper develops an economic growth model of a small open economy with government debt, tourism and imported goods in a perfectly competitive economy. The national economy consists of three – industrial, service and public – sectors. The production side is based on the neoclassical growth theory. The household behavior is modelled according to Zhang’s approach. We describe nonlinear dynamic interactions between economic structural change, capital accumulation and public debt under different combinations of taxes on the goods sector, the service sector, the wage income, the rate of interest, consumption of good, and consumption of service. We simulate the model and demonstrate that the system has a unique unstable equilibrium point. We carry out comparative dynamic analysis to provide insights into complicated consequences of environmental changes. For instance, if the government spends more out of the national income, the short-run consequences are: the debt and the ratio of the debt and the national output are increased; the economy employs more capital, produces less, and borrows more from foreign economies; more tourists visit the country; the household has less wealth and reduces consumption of the three goods; and the industrial sector shrinks and the service sector expands.

30- Credibility, Macroeconomic Fundamentals and Asian Monetary Unit: A State Space Analysis of ASEAN+3
by Jamshaid Ur Rehman and Dr. Tasneem Zafar

Abstract
This study investigates the monetary credibility of ASEAN plus three countries (APTCs) participating in a proposed Asian monetary union against three potential anchors economies i.e. China, Japan and US. We developed the Capital Asset Price model (CAPM) based time varying monetary credibility indexes (TVMCIs) estimated with Kalman filter algorithm (KFA) of all APTCs. In univariate Markov regime switching (MRS) models, we find discrete regime shifts in the credibility. In multivariate MRS models, we find that macro-fundamentals exert asymmetric effects on credibility and time-varying transition probabilities (TVTPs). There is strong evidence that macro-fundamentals cause switching in TVMCIs and TVTPs between the two regimes (high and low) in most APTCs. We find more significant outcomes against US vis-à-vis against China and Japan.

31- Determinants of Child Labor in Pakistan: A Time Series Analysis
by Usman Azhar and Samina Khalil

Abstract
This paper is aiming to investigate the long run and short run dynamics of the important determinants of child labor at macroeconomic level in case of Pakistan. The import distinction of this paper is that it is the first attempt to investigate the long run and short impacts of determinants of child labor by using time series estimation technique of Autoregressive Distributive Lags Model (ARDL). The long run findings suggest that an increase in GDP per capita and gross primary school enrollments lead towards the reduction of the incidence of child labor. Despite of fact that engagement of children in any kind economic activities is legally banned in Pakistan, but due to lack of enforcement of laws and poor institution support. Similarly, an improvement in the quality of existing institutions can potentially contributes in the reduction of child labor. However, the positive and significant sing of the coefficient of young dependency (YD) suggests that higher dependency of young children is increasing the incidence of child labor in Pakistan. The overall findings suggest that in short run the determinants such as GDP, Scholl enrolments, dependency, and institutional quality have similar impact on child labor, the impact of growth in per capita income is more apparent in the reduction of child labor.

32- Institutions, human capital and economic output volatility: a case of open economies
by Hira Mujahid and Shaista Alam

Abstract
It is debated that why some countries facing great macroeconomic volatility and crises. The basic reasons of dreadful macroeconomic performance and volatility consist of poor quality of institutions and unnecessary government spending, high inflation, and mismanaged exchange rates. This paper investigated the relationship between institutional quality, human capital and volatility of economic output. The paper uses various Indicators of institutional quality. The sample includes a panel of 140 open economies subject to the availability of data covering the annual time period 2002-2014. The results proposed that greater institutional quality increases economic performance and reduces the output volatility.

33- Informal Employment in Pakistan: Survivalist or Structuralist?
by Nadia Tahir and Pervez Tahir

Abstract
This paper examines the increasing informality in Pakistan accompanying the fluctuating industrial growth in the wake of economic liberalization. The percentage distribution of labour in informal employment by major industry divisions is used as a proxy for the informal sector.  A dynamic panel data model is constructed to analyze cyclicality and industry layering of informal employment. It is found that a declining tariff rate increases informality, confirming the structuralist hypothesis. There also exists a static subset that is marginal and growth-retarding. The results imply a structured and targeted policy for each subset to deal with the undesirable features of informal employment.

34- The Impact of Preferential Trade Agreements on South Asian Export Flows:Using Matching Econometrics
by Lubna Naz, Naeem-uz-Zafar and Mohsin Hasnain Ahmad

Abstract
This paper investigates the effects of preferential trade agreements (PTAs) on export performance of four South Asian countries; Bangladesh, India, Pakistan and Sri Lanka. The study also examines the long-term PTAs’ average treatment effect (ATE) on South Asian export flows with their partners (intra and extra)around the world. The study provides methodological comparison of parametric and non-parametric matching-propensity score matching (PSM) technique. It is evident from the findings of the study that PSM provides more plausible estimates of PTAs. The empirical findings also reveal that PTA increases South Asian export flows by 129 percent. Moreover, the intra-regional and extra-regional exports increase by 124 percent and93 percent respectively over the period of 1980-2012. The overall findings suggest that PTA formation significantly increases intra and extra regional export flows of South Asian countries. Finally, the study recommends that government and policy makers should execute more such agreements to boost trade among the regional countries.

35- The Rule of Law for Minimum Wage in Pakistan and the International Obligations
by
Asma Bano

Abstract
This study aims to analyze the Pakistan’s Constitutional Laws on minimum wage and their comparison with international standards. Pakistan passed its first constitutional law for minimum wages: The Minimum Wages Ordinance 1961, which was extended further, was named the Minimum Wage Rules 1962. A systematic analysis of laws and polices (till 2015) is presented; and by mean of comparative studies this research proves that ‘minimum wage rules’ in Pakistan, follows the instructions of International Labour Organization (ILO). ILO is providing support at national and provincial levels to align all labour legislations according to the international labour standards.