Haider Mahmood

Income inequality and agglomeration economies: a case of a developing economy

The concentration of population generates spillover effects and one would expect the upsurge of business and economic activities in that particular area which also affects income distribution in the society. This paper is intended to elucidate income inequality in the context of agglomeration economies in a developing economy like Pakistan during 1980-2014. The study period is hallmarked by the major shocks across the world economies including Pakistan. Therefore, the study incorporates structural break both during the pretesting of time series properties and in cointegration tests. The bounds testing for the long-run cointegration reveals that the under investigating variables are cointegrated. We further find that the Kuznets inverted-U hypothesis does not hold in Pakistan. Moreover, the agglomeration economies negatively and linearly affect income inequality. This study suggests that the concentration of business activities in the less agglomerated areas is helpful in reducing income inequality.

Pakistan's agricultural exports, determinants and its potential: an application of stochastic frontier gravity model

ABSTRACT The most important and imperative objective of the developing nations is rapid economic growth and exports are generally considered as an engine for economic growth. Being an agro-based economy, agriculture exports play pivotal role not only in economic growth but also in socioeconomic uplifting. This study aims at evaluating main determinants of agricultural exports of Pakistan by applying stochastic frontier gravity model over the period of 1995–2014 for a sample of 63 countries. In addition, the study also analyzes whether there is any untapped export potential between Pakistan and the trading partners in agriculture sector. The results confirm the consistency of gravity model for agriculture exports of Pakistan. Likewise, the estimates also point out that bilateral exchange as well as tariff rates also effect agriculture exports. The study has also incorporated the effect of common border, common culture, colonial history and preferential trading agreements by including their respective dummies. The study confirms the significance of each factor, except common language, with their respective magnitude. Moreover, technical efficiency estimates reveal that Pakistan has great export potential with neighboring, Middle Eastern and European countries.

Electricity consumption and economic growth in Pakistan: menace of circular debt

This study explores the causal links among electricity consumption, circular debt and economic growth. Covering the time span from 2005-2015 and using quarterly data, Granger causality based on vector error correction model (VECM) is employed to find the direction of causality after confirming cointegration. Next, the robustness of causality results is determined through variance decomposition analysis (VDA). The present study finds short run bidirectional relationship between circular debt and economic growth and between electricity consumption and economic growth as well. On the other hand, long run unidirectional causality is found running from circular debt and economic growth to electricity consumption. The findings of VDA reinforce causality results. The study finds that Pakistan despite being rich in natural resources (coal, water) is entangled in the web of circular debt that has made the blessings as curse which shows an example of poor governance. The results of study based on two econometric tools conclude with little more conviction that there is a need for exploitation of indigenous resources and wise allocation of available resources for electricity production and suggests electricity conservation policies including improvement of distribution and transmission capacity of its power system to reduce wastage of electricity along with less reliance on oil consumption in electricity production.

An empirical investigation of stability of money demand for GCC countries

Money demand stability attracts the attention of policy makers while deciding the right policy instrument for the monetary policy. The present study estimates the money demand function by using a time spam of 1980-2014 for the GCC countries. For this purpose, it uses the ARDL cointegration technique to find long-run relationships. The cointegration test has confirmed the long-run relationships in money demand functions for all GCC countries. In the long-run analysis, a positive income elasticity of money demand has been found in all GCC countries. Negative and significant semi-interest rate elasticity has been found in UAE, Bahrain, Qatar and Kuwait. Positive and significant exchange rate elasticity has been found in UAE and KSA and it has found negative in Qatar and Kuwait. Positive and significant inflation rate elasticity has been found in Kuwait and Bahrain and it has found negative in UAE, Oman and KSA. Short-run analysis also reveals some significant elasticities. Further, money demand function proofs stable in KSA and Oman and it remains unstable for the rest of GCC countries.