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Fiscal Imbalances, Poverty and Inequality in Pakistan


Irfan Ullah

M. Phil Research Fellow, Department of Economics, Gomal University, D. I. Khan, Pakistan

Naimatullah Baber
President and Assistant Professor, Gomal University, D. I. Khan, Department of Agricultural Economics, Pakistan

Published in: Public Finance Quarterly 2014/1 (p. 86-93.)


Summary: This paper has analyzed the fiscal imbalances, poverty and inequality with relevance to Pakistan. We use time series data from 1981 to 2010 and employ Autoregressive Distributed Lag Model (ARDL) to cointegration for estimation. The empirical findings suggest that fiscal deficits increase the poverty level and provide biases for inequality. Since deficit is financed through money supply, government debt and indirect taxes which threaten the purchasing power of the poor and drag them towards poverty. Indeed most of government spending is misallocated due corruption and weak institutions; consequently money accumulates in few hands which wider gap between rich and poor, hence generates inequality.

Keywords: fiscal imbalances, poverty, inequality

Journal of Economic Literature (JEL) kód: H5, E62, D31, I32


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