Title: Does democracy embolden economic growth in Pakistan? Evidence from ARDL bound testing and rolling window analysis

Authors: Arshian Sharif; Sahar Afshan; Bushra Shahzad Khan

Addresses: Department of Management Sciences, IQRA University, Karachi-75300, Pakistan; Faculty of Business Administration, Mohammad Ali Jinnah University, Karachi, Pakistan ' Department of Management Sciences, Dadabhoy Institute of Higher Education, Karachi, Pakistan ' Department of Management Sciences, IQRA University, Karachi-75300, Pakistan

Abstract: This study investigates the relationship between democracy and economic growth in Pakistan by using the annual time series data from the period 1972 to 2013. The ARDL bound testing cointegration approach, Johansen and Juselius cointegration approach and Gregory and Hansen structural break cointegration approach confirm the valid long-run relationship between democracy and economic growth. Results suggested that democracy, labour force and gross fixed capital formation have positive and significant impact on economic growth in both long run and short run. Results of generalised forecast error variance decomposition method under vector autoregressive (VAR) system suggested unidirectional causal relationship between democracy and economic growth in Pakistan. The present study may guide policymakers in formulating conclusive monetary and fiscal policies to increase economic growth in Pakistan and also get sustainable economic growth for long span of time.

Keywords: democracy; economic growth; labour force; structural breaks.

DOI: 10.1504/IJEBR.2018.089684

International Journal of Economics and Business Research, 2018 Vol.15 No.2, pp.180 - 203

Received: 27 Aug 2016
Accepted: 23 Jan 2017

Published online: 06 Feb 2018 *

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