Papers for Forthcoming Issues

1- Why Children Study, Work or stay Idle? Some Evidence from Rural Pakistan
by Muhammad Jehangir Khan, Karim Khan, and Saima Nazeer

Abstract

In this study, we examine what does determine the decisions of children regarding schooling, work, and idleness in rural areas of Pakistan. In particular, we are interested in looking at the effect of children’s illness/disability on parental time allocation decisions with regard to their children. While using Pakistan Rural Households Panel Survey (PRHPS) (2012), we employ the Multinomial Logit Model in order to find the determinants of children’s activities. We find that child health is an important determinant of child time allocation. Children’s previous education and age, parental education, land ownership enhance child schooling and discourages child work/idleness. With regard to child work, especially of girls, is significantly lower in households having educated mothers. Likewise, child disability and illness result in a decline in the likelihood for children to go to school or work. Alternatively, child disability and illness result in an increase in the likelihood of children idleness. In this regard, girls are more affected.

2- Sources of Volatility in Stock and Currency Markets: A Panel Data Analysis of European Countries
by Muhammad Jamil

Abstract

Volatility in financial markets is a highly explored area of research for the last few decades. Possible reasons for high concentration on the markets are its unexplained and unexplored sources. The present study aims to check certain macroeconomic variables as determinants of financial markets (stock market and exchange rate) volatility. It also aims to analyzethe contribution of thevolatility of one financial market to the volatility of another financial market before and after the financial crises. The analysis is conducted using two types of data sets from 27 European countries. The study employed AR(k)-EGARCH(p,q) models to measure volatility in financial markets. The study finds no significant interlink effects among volatilities of stock market returns and volatility of exchange rate returns after the financial crises. However, the increase in volatility in one market causedan increase in the volatility of the other market before the financial crises. Further, results also revealed that macroeconomic variables affect volatilities in these markets differently before and after the financial crises. The study recommends that the macroeconomic policies for stability in these markets cannot coincide as they differ in their impacts in different markets.

3- Institutional Governance and Climate Change Nexus: A Panel Data Analysis
by Ahmad Nawaz, Muhammad Tariq Majeed and Hafiz Muhammad Abubakar Siddique

Abstract

This study presents the insightful and comprehensive empirical evidence on impact of income and institutional governance on climate change based on panel data of 203 countries for time series of 1996 to 2017. We have divided the countries into sub-samples of 34 low income, 101 middle income and 68 high income countries by following the World Bank country classification. Econometric analysis is carried out by employing fixed effect model in order to incorporate the unobserved heterogeneity among countries, and instrumental variable technique generalized method of moments is applied to tackle with issue of endogeneity. Major contribution of this study involves providing the new empirical evidence on non-linear impact of institutional governance on CO2 emissions (proxy of climate change) and conditional impact of income and institutional governance on these emissions. Findings of the present study indicate that there is robust inverted-U shape relationship between institutional governance and CO2 emissions in all income groups of countries. We have termed this curve as Environmental Governance Curve (EGC).

4- Measurement of Living Standards Deprivation in Lahore (A Periodical Comparison Approach)
by Dr. Muhammad Afzal

Abstract

The study assesses living standards deprivation by determining absolute and relative contribution of each indicator of MPI in overall poverty for the periods 2011 and 2014 by using MICS data and Alkire-Foster method in Lahore Division of Punjab-Pakistan. The value of MPI shows decline in overall poverty level in Lahore Division in 2014 as compared to 2011. District Kasur is found to have more value of MPI than that of other districts of Lahore Division. The living standards of the people residing in rural areas of Lahore Division is found to be quite low than that of residing in urban areas. Different standings of poverty level is found in all Districts of Lahore Division. Resource allocation according to the bands of poverty of each district is suggested. This study also recommends improvement in education through raising adult literacy rate to tackle multidimensional poverty in Lahore Division.

5- Women Empowerment and Infant Mortality in Pakistan: Micro Data Evidence
by Maryam Bibi, Faiza Azhar Khan and Iffat Irshad

Abstract

Women empowerment has its significance for the economic and social development of countries; specifically, women empowerment is rendered important for the child health. Child health being part of sustainable development goals 2030 can be traced through reduced infant and child mortality rates. Owing to the importance of women empowerment for the infant mortality, the present study is an attempt to analyze the impact of women empowerment on infant mortality in Pakistan, utilizing the data from Demographic and Health Survey (DHS-VI) of United States Agency for International Development(USAID). The sample consists of 24,201 individuals. Principal Component Analysis (PCA) has been employed to measure the women empowerment using education level, employment status, asset holdings and decision making power. Besides women empowerment, other socio-economic, demographic and biological variables have been included as regressors. Logit model has been employed for the estimation of the determinants of the infant mortality. The results show that women empowerment significantly reduces the infant mortality. The study recommends that policy makers ought to introduce broad socio-economic interventions aiming at the wellbeing of both women and their infants.

6- Industrial sector and global oil price fluctuations: A case study of Pakistan
by Dr. Bushra Yasmin

Abstract

This study empirically investigates the dynamic relationship between global oil price fluctuations and industrial sector in Pakistan for the time period 1974-2015 employing an Autoregressive Distributed Lag Model. The findings suggest that industrial sector is prone to the global oil price fluctuations where observed and forecasted oil price volatility along with the net oil price increase relative to preceding three years has negatively significant effect on industrial value added share in GDP. Moreover, the oil price shock driven by the global demand has positive while the oil market-specific shock geared by precautionary increase in oil demand has negative effect on industrial value added, in the long run. Overall, uncertain oil price fluctuations and endogenously determined nature of oil price increase has dominant effect on the industrial sector in Pakistan than the annual oil price changes. The findings suggests domestic price stability along with move towards export diversification to form a strong industrial base rendering international oil price fluctuations impartial, on the one hand and for reaping the potential benefits of devaluation of domestic currency, on the other. However, improved energy efficiency and low oil dependency in the long run will be required to stimulate the industrial sector’s contribution in GDP.

7- Analysis of Agricultural Production in Pakistan: A Study Based on Asymmetric Role of Inputs
by Naveed Iqbal, Dr. Maqbool H. Sial and Adeel Saleem

Abstract

Agricultural inputs are peculiar in nature as an asymmetry in their roles can be identified during the production process. These inputs can be grouped into a set of growth inputs or a set of facilitating inputs. The inputs affecting biological or physiological growth from the inside of the plant are called growth inputs e.g., water, nutrients, seed, and soil. The inputs that affect plant growth indirectly, such that they regulate the role played by growth inputs from outer environments of plants e.g., pesticides, capital, and labor are facilitating inputs. This concept of asymmetry, based upon agronomic principals of crop production, is incorporated in agricultural economics by Zhengfei, Oude Lansink, van Ittersum, and Wossink (2006). This variant role of inputs is studied by using farm household level data. In Pakistan, this study is one of the first studies that employ a double bootstrap methodology for two-stage analysis in a semiparametric way. It is reported that pesticides, family labor, and pesticides enhance Technical Efficiency (TE) of growth inputs. However, hired labor affects it negatively. The study also shows the effect of farm size on productivity.

8- Sustainable Impacts of Social Safety Nets: The Case of Benazir Income Support Programme (BISP) in Pakistan
by Tehmeena Iqbal, Dr. Ihtsham Ul Haq Padda, and Dr. Shujaat Farooq

Abstract

This study assesses the welfare impact of Benazir Income Support Program (BISP) unconditional cash transfers (UCTs)by using the BISP impact evaluation survey panel data conducted in 2011 and 2016. The panel survey contains information of both the beneficiary and non-beneficiary households, whereas the 2011 round serves as the baseline information. The study measures the welfare impact through various indicators including per adult equivalent monthly consumption, headcount poverty, multidimensional poverty index (MPI) and child deprivation index (CDI).The results of the analysis indicate that despite of improvement in welfare through BISP, benefiting households are still at disadvantageous conditions and majority of them has not transited out of poverty. The cross-sectional estimates reveal that monthly consumption expenditures due to improvement in non-food consumption of beneficiary households significantly improved. No significant impact is found on MPI and CDI. The analysis overtime shows that the economic wellbeing of recipient households has improved.

9- China-Pakistan Trade: from RTA to CPEC
by Yasmin Tahira, Amjad Masood, Samiullah and Manan Aslam

Abstract

Export lead economic growth is evident in literature. However, tariffs and the distance between exporting and importing countries increase trade cost, hence hinder trade. The China-Pakistan Economic Corridor (CPEC) is a substantial development as it would potentially act as ‘a tool to kill distance’ in order to enhance trade activity between the two countries. The current study aims to analyze the impact of the regional trade agreement (RTA) signed between the two governments on Pakistan’ exports. We employed panel gravity trade modeling in order to estimate the effect of tariff reduction using the Poisson Pseudo Maximum Likelihood (PPML) estimator.  Secondary data is used for a time period of 13 years from 2003 to 2015. For the sake of a comprehensive analysis, ten products are studied at level 2 of the Harmonized System of product codes i.e. HS-2 level. The estimates showed expected signs for GDP, distance, tariffs and other traditional variables of gravity equation. However, the impact of tariff varies across products. The estimated parameter for the variable distance would yield information to understand the pace of enhancement of trade resultant to the CPEC. Moreover, the study gives basic insight into the probability of enhancement of intra-industry trade potential for various industries as a result of the CPEC developments.

10- A Cointegration Analysis of Financial Liberalization and Economic Growth in Pakistan (1972-2016)
by Abida Yousaf and Tahir Mukhtar

Abstract

Financial liberalization is generally expected to play a crucial role in the economic development as it involves the allocation as well as the management of money. The present study aims to investigate the financial liberalization and growth nexus in context of Pakistan by using the FM-OLS cointegration technique over the time period 1972 to 2016. The importance of financial liberalization process in Pakistan has been captured through the Capital account liberalization variable. However, due to the increasing role of the banking industry such as the bank credit to private sector   and money supply .The study also incorporates the financial development as a control variable. The study finds that capital account liberalization and financial development promotes economic growth of the country. Moreover, Investment, human capital, trade openness and government expenditure are also proved significant contributors of economic growth. The significant and positive impact of capital account liberalization for a given level of financial development is also confirmed through the interaction terms. This finding imply that policy makers should pursue capital account liberalization policies to further the growth process in Pakistan and measures should be taken to develop the financial sector  as it significantly and positively contributes towards economic development.

11- Demand Projections and Consumption Pattern Analysis at Provisional Level in Pakistan
by Hafsa Hina and Seyyda Taskeen Abbas

Abstract

Fluctuations in income and population explosion are imperative elements for changing the structure of food demand. In perspective of the significance of the food demand examination for Pakistan, this study investigates the demand elasticities and household consumption behavior both at provincial and national level in order to plan the future level of demand of certain food items. Almost Ideal Demand System (AIDS) model is applied on Household Integrated Income and Consumption Survey (HIICS) 2015-2016 for demand analysis. The results shows that socio economic factors such as household size, profession and literacy of head plays a significant role in explaining the pattern of food demand along prices and income. The per capita household projected demand from 2016 to 2040 shows that suggests that with the passage of time, KP will exceed PB in terms of total per capita consumption of all food items.