Expanding fiscal policy in Pakistan boosts current account and exchange rate.
The study looked at how government spending affects Pakistan's economy. By analyzing data from 1960 to 2009, researchers found that when the government spends more money, it can improve the country's current account balance. This means Pakistan can export more than it imports. Additionally, an increase in private saving and a decrease in investment also help improve the current account balance. However, this can lead to a decrease in the value of the country's currency. The study also found that changes in the country's output can impact both the government's budget and the current account balance.