Journal of Contemporary Macroeconomic Issues <p>The inception of <em><u>Journal of Contemporary Macroeconomic Issues</u></em> (JCMI) is to publish the Research Work that originates to provide the cover to contemporary and incessant range of persistent macroeconomic hatchbacks at the emerging economies of the world. The Journal came into being in the year 2020.</p> <p><strong>ISSN PRINT: </strong><em>2708-4973</em></p> <p><strong>ISSN ONLINE: </strong><em>2709-0469</em></p> <p><strong>FREQUENCY OF PUBLICATION: </strong><em>BI-ANNUAL (JUNE &amp; DECEMBER)</em></p> <p><strong>REVIEW PROCESS: </strong><em>TRIPLE BLIND PEER REVIEW</em></p> <p><strong>SYSTEM OF SUBMISSION: </strong><em>OPEN JOURNAL SYSTEM (OJS)</em></p> <p><strong>LANGUAGE: </strong><em>ENGLISH</em></p> <p><strong>PUBLISHER: </strong><em>SCHOLASTIC CENTER FOR EDUCATION, KNOWLEDGE, AND RESEARH</em></p> <p> </p> Scholastic Center for Education, Knowledge, and Research, Pakistan en-US Journal of Contemporary Macroeconomic Issues 2708-4973 Investigating the Influence of Economic and Financial Factors on the Share Market <p>This study investigates the interconnection and influence of factors including Financial and Macroeconomic on Share Market Returns. It aims to comprehend how a range of factors influence diverse economies due to varying market conditions and supply-demand dynamics. Employing a quantitative approach grounded in the Post Positivism Paradigm, this study employs Jonas &amp; Mishkin (2004) monetary policy mechanisms as the conceptual framework. The PSX-100 index serves as a substitution for evaluating share market returns, utilizing data spanning a decade from June 2012 to July 2023. Correlation Analysis unveils a negative linkage between Inflation, Interest rates, and Exchange rates, while demonstrating a positive correlation between Industrial Production and share market returns. This investigation furnishes valuable insights for investors keen on comprehending the risk-return dynamics in share market investments, while also establishing a robust foundation for future investigations into related domains.</p> Muhammad Abdullah Idrees Ayesha Khan Sumera Mehmood Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-11 2023-12-11 4 2 1 12 Political Instability and the Patterns of Foreign Direct Investment: Fresh Empirical Evidence from Developing Economies <p><em>The major objective of this study is to empirically analyze the impact of political instability on the patterns of foreign direct investment (FDI) in developing nations.</em><em> Leveraging data from 24 countries across 10 regions over a 41-year period, we employ the first-difference generalized method of moments (GMM) and fixed-random effect models to analyze the data and robustness of our regression models. Our findings unveil a significant negative impact of political instability on FDI within the selected economies. Additionally, inflation, domestic savings, and exchange rates are revealed as factors diminishing FDI inflows, while GDP exerts a positive influence on FDI trends. To address these challenges and promote investment in developing countries, the study underscores the significance of implementing the MSJELT plan, which focuses on banking, institutional, and individual-level reforms. </em></p> Shahnaz Perveen Muhammad Ayyoub Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-11 2023-12-11 4 2 13 38 Energy Crisis of Pakistan: Analyzing Governance Issues <p><em>Pakistan </em><em>faces an energy crisis because of shortages of energy which has emerged as major risks to the economic growth and the living standards of the citizens</em><em>. T</em><em>he objective of this study is to analyse energy shortages as well as the governance issues in the power sector of Pakistan and recommend policies to improve governance and achieve financial and technical sustainability. The analysis suggests that power shortages can be minimized significantly by improving financial management and utilizing the full existing capacity of power generation. Addressing the issue of circular debt will improve the financial management which requires payment of tariff subsidy by the government to the distribution companies on time to enable the CPPA to make timely payments to the fuel companies and the IPPs. Tariff subsidy can be reduced by reducing the cost of power generation through reduction in theft of electricity and line losses.</em></p> <p><em>We recommend policies to implement the integrated and cohesive development, planning, and execution of policies across the energy sector along with improving the corporate governance. While gas and oil pricing policies should be revisited to realize the sector’s full potential in the sedimentary basin, there is a need to formulate policies to provide incentives for the development of tight and shale gas. The expensive energy mix can be diversified by formulating policies to increase reliance on domestic sources particularly through exploiting substantial untapped coal potential for power generation. In addition, government need to provide incentives to realize renewable energy resources like wind and solar which can add significant generation capacity at a competitive tariff. Federal government needs to play its role in developing a consensus among provinces for construction of mega dams so as to increase country’s hydel capacity</em></p> Talat Anwar Khalid Saeed Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-11 2023-12-11 4 2 39 51 Exploring the Role of Financial Development in Labor Market Volatility <p><em>The study explored the relationship of financial development at domestic and international level with volatility of labor market in Pakistan. To model the volatility in labor market the rolling standard deviation procedure of employment variable was used. The other control variables included in endeavor were trade openness, gross fixed capital and output growth. ARDL approach was employed for the estimation of cointegration relationship using annual data from the period 1973-2020. This research found a significant positive influence of financial markets on variables of labor market. The results have provided evidence founded on theory of financial fragility by Keynes (1936) and Minsky (1986). The negative value of ECM (-0.253) also shows convergence behavior and a meaningful speed of adjustment. The study suggested that growth in financial markets is needed to strengthen economic position of a country because it has a significant impact on labor market.</em></p> Muzammil Hussain Fahad Malik Mahnaz Muhammad Ali Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-12 2023-12-12 4 2 52 60 Measurement and Decomposition of Productivity Change in Pakistani Firms <table width="673"> <tbody> <tr> <td width="451"> <p><em>The main objective of this study is to measure and decompose changes in productivity and efficiency of firms using the annual data covering the period 2001-2020. It also observes whether the productivity and efficiency of firms have been increasing over time. The study employed the data envelopment analysis-based Fare-Primont total factor productivity (TFP) index developed by O’Donnell (2010). The estimates show that total factor productive efficiency (TFPE) progress is major component during the examined period which decreases the negative impact of technological regress. In addition, the estimates show that the TFP of firms increases over time in Pakistan except 2019 and 2020. Further, our results indicate that firms have to focus on technical efficiency because it is major factor that influencing the TFPE progress, and reducing the positive impact of mix efficiency and residual scale efficiency. Furthermore, the results demonstrate that on average, the TFP of automobile assembler industry is greater than automobile parts and accessories, cement, and sugar industry. Finally, the estimates show that changes in technology have significant impacts on the TFP. Overall, the findings recommend that the government is required to provide incentives and cost-effective technologies that enhance the productivity and efficiency of firms because productivity enhancement is a prerequisite condition for sustainable economic development.</em></p> </td> </tr> </tbody> </table> Zia ur Rehman Abdul Rashid Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-13 2023-12-13 4 2 61 74 Approaches to Identify the Middle Income Trap and Episodes of Growth Slowdown <p><em>Economic growth and human wellbeing from the perspective of cross-country differences of income are among the core and fundamental concern. This study analyzes the episodes of persistent and aggravated growth slowdown commonly known as middle income trap by employing the data for 183 countries over the period 1960 to 2021. We attempt to identify the middle-income trap by using absolute income approach based on different criteria. Considering the neoclassical growth model and theoretical framework of conditional convergence, we also attempt to identify the middle-income trap by using relative income approach. Based on two approaches, the results identify existence of middle-income trap in different parts of the world, particularly in East Asia, Latin America and Middle East region. Findings of the study are beneficial for policy implications regarding strategies to counter the presence of inertia and growth slowdown in income transition in MICs which may be helpful to a great extend in avoiding the MIT.</em></p> Zaheer Ahmed Babar Hussain Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-14 2023-12-14 4 2 75 90 Contemporary Macroeconomic Issues in Human Development Through Electricity Access and Institutional Quality: Evidence from South Asia <table width="673"> <tbody> <tr> <td width="451"> <p><em>The contemporary issues in macroeconomics involve restructuring policies and redistributing resources. The reformulation of policy aims to enhance human welfare. This led to shedding light on the importance of institutional contribution to better provision of social assistance for human development, such as electricity access. The current study aims to identify the impact of electricity access on human development with the interaction of institutional quality in South Asian countries. The data used for the investigation ranged from 1996 to 2021. Having observed the existence of cross-sectional dependence as well as heteroscedasticity in its trend, the Driscoll-Kraay (D-K) technique was used in this study. This study runs 3 distinct models for South Asian countries in a macroeconomic framework. The findings indicate the variables’ stationarity results are mixed and cointegration exists between variables. Moreover, the major results of the D-K model concluded that access to electricity with institutional quality has long-term positively and significantly impacted the human development index. Both jointly contributed to social and economic progress, improved health systems, lower poverty, and a slew of other enhancements that boosted human development levels more swiftly and efficiently. Thus, governments may create an atmosphere that promotes human growth by increasing electricity access and improving the quality of institutions.</em></p> </td> </tr> </tbody> </table> Saima Sajid Sania Ahmed Maryam Arooj Syed Saqlain Ul Hassan Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-14 2023-12-14 4 2 91 105 The Role of Farmers’ Education in Bolstering Cereal Yields: A Case Study of Cereals in Punjab <p>Pakistan is an Asian developing country, with the agriculture<br />sector being the largest in terms of labor participation. Agriculture<br />has a positively significant effect on the total GDP of Pakistan. This<br />study emphasized the role of education in increasing the<br />productivity of cereal-producing farmers of Punjab. The data was<br />taken from the Pakistan Economic Research Institute (PERI), as the<br />survey of this institute is reliable. Relevant data was extracted<br />from the questionnaire and thus, the regression analysis was done.<br />Agriculture highly contributes to Pakistan’s GDP and serves as the<br />backbone of our country. According to the results, it is concluded<br />that education increases the productivity of farmers by enhancing<br />their skills and decision-making ability. Thus, better education<br />facilities should be provided to the farmers in rural areas so that<br />the country can benefit from increased output.</p> Syeda Zahra Azhar Faiz ur Rahim Rehana Ali Naqvi Sidrah Awan Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-15 2023-12-15 4 2 106 114 Political Stability and Investment Behavior in Pakistan <p>This study examines Pakistan's economic dynamics, emphasizing both<br />immediate and long-term influences by using the data from WDI during<br />2000 to 2023. ARDL model is employed to assess the short and long run<br />dynamics of the model. The results provide Pakistan's pursuit of<br />economic stability and growth, short-term variables including GDP<br />growth rate, political stability, and trade activity become critical factors<br />impacting immediate economic outcomes. Contrarily, variables like<br />inflation and foreign direct investment (FDI) have significantly lower<br />short-term importance, indicating a more gradual impact. Over an<br />extended period, the analysis highlights the durable impacts of foreign<br />direct investment, GDP growth rate, and political stability on<br />Pakistan's economic trajectory, indicating their pivotal functions in<br />promoting economic advancement. The research also emphasizes the<br />detrimental effects of inflation over the long run, underscoring the<br />necessity of efficient inflation control strategies.</p> Abdul Mansoor Muhammad Zubair Ghulam Yasin Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-15 2023-12-15 4 2 115 123 Envisaging the Role of FDI for Unemployment Reduction in Pakistan <p>The era of last century gave birth to the phenomenon of globalization. Access to the markets and transfer of resources enhanced the economic activities worldwide. Various studies depict that foreign direct investment (FDI) inflows induct a vital role in the economic advancement and they pose apparent impacts on the employment generation process. FDI is also a cause of technology transfers for imparting skills to the workers. This study analyses the role of FDI in reducing the unemployment in Pakistan. The study uses vector errors correction model (VECM) on the time series data over the span of 1991-2023. The results observe long-run impacts of FDI along with its shortrun influences on the employment levels in the economy. This impact is of positive nature which ultimately ensures unemployment reduction in the country by giving rise to the FDI inflows. Moreover, these results forecast the regulation of short run shocks at a higher speed of adjustment in the long run. Henceforth the authorities are recommended to commence and implement the FDI magnetizing policies for improving the employment conditions in the country.</p> Ehtsham ullah Jarral Dawood Khan Abbasi Nabila Saddaf Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-18 2023-12-18 4 2 124 136 The Effect of Trade Liberalization on the Economy of Pakistan: A Time Series Data Analysis <p>The purpose of this research was to learn how freer trade affects a country's GDP. The data was used from the period 1972 to 2021, we tested the impact of several independent indicators on the dependent variable of GDP per capita. These variables included trade openness, labor force participation rate, foreign direct investment, exchange rate, and trade openness multiplied by the exchange rate. The stationarity of the data was tested using unit roots, and cointegration analysis and relationship estimation were performed using the OLS (least square) method. The OLS analysis showed that the GDP per capita in Pakistan was positively and significantly influenced by trade openness, the labor force participation rate, FDI, and the exchange rate. A negative and statistically significant effect on Pakistan's GDP per capita was nevertheless found for the interaction term of trade openness multiplied by the exchange rate.</p> Muhammad Kamran Bhatti Muahmmad Abdullah Khan Ali Hassan Muhammad Ali Husnain Copyright (c) 2023 Journal of Contemporary Macroeconomic Issues 2023-12-31 2023-12-31 4 2 137 145