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KCI등재 학술저널

Power Devolution and Economic Stability: Evidence from Pakistan

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The current study analyzed the impacts of fiscal decentralization (FD) on the economic stability of Pakistan. This study used time series data from 1981 to 2017. The collected data was first passed through the unit root analysis. ARDL estimation techniques were employed to scrutinize the data where long-run associations were tested through Wald F-statistics. The long-run estimates were extracted by applying Ordinary Least Square, and error correction mechanisms were employed to find the speed of adjustment for disequilibria between the long and the short run. Wald F-statistics confirmed the existence of long-run cointegration. Long-run elasticities suggested that fiscal decentralization because of limited institutional capabilities of provincial governments failed in bringing stability in the economy of Pakistan. Similarly, transparency issues and misspecification of projects hinder the outcome of investment to stabilize the economy. High service payments on debt cut the amount that can be used for skills improvements and destabilize the economy. High Population growth puts pressure on infrastructure and reduces production capacity, ultimately destabilizing the economy by increasing unemployment and inflation. Based on these findings, the government is suggested to improve the institutional capacity of lower governments for the desired outcome of power devolution.

1. Introduction

2. Literature Review

3. Research Methods

4. Results and Discussion

5. Conclusion

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