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A macroeconometric model for trade policy evaluation: evidence from Pakistan

Syed Tehseen Jawaid (Applied Economics Research Centre, University of Karachi, Karachi, Pakistan)
Abdul Waheed (Department of Economics and Finance, College of Business Administration, University of Bahrain, Sakhir, Kingdom of Bahrain)

Journal of Chinese Economic and Foreign Trade Studies

ISSN: 1754-4408

Article publication date: 1 January 2018

Abstract

Purpose

The purpose of the study is to develop a macroeconometric model for evaluation of trade policies and forecasting of trade performance of Pakistan with different regions or group of countries.

Design/methodology/approach

These regions or group of countries are Organization of Islamic Cooperation, Organization of Economic Cooperation and Development, Association of Southeast Asian Nations, South Asian Association for Regional Cooperation and the rest of the world. A macroeconometric model containing 15 behavioral equations and eight identities.

Findings

Cointegration results suggest that there exist long-run relationships among variables of all behavioral equations. Additionally, results of different policy shocks based on unit value of export (export price), unit value of import (import price), exchange rate, foreign direct investment, interest rate and foreign exchange reserve suggest that the model is useful for economic planning to sustain growth performance of Pakistan.

Originality/value

In this study, the authors develop for the first time ever a macroeconometric model for the evaluation and forecasting of regional trade policy and performance for Pakistan.

Keywords

Citation

Jawaid, S.T. and Waheed, A. (2018), "A macroeconometric model for trade policy evaluation: evidence from Pakistan", Journal of Chinese Economic and Foreign Trade Studies, Vol. 11 No. 1, pp. 49-103. https://doi.org/10.1108/JCEFTS-08-2017-0023

Publisher

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Emerald Publishing Limited

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