Journal of Contemporary Macroeconomic Issues

The Empirics of Okun’s Law Using Augmented ARDL: The Case of Pakistan

Shah Khalid, Ibrar Hussain, Nafees Ahmad, Riaz Ahmad, Sajjadullah — Tue, 02 Dec 2025 00:00:00 +0000

From time series data covering 1972 to 2024, the objective of the study is to investigate the Okun's coefficient for Pakistan. The coefficient of Okun's law is determined using the Augmented ARDL econometric technique to estimate the long-run elasticities and short-run dynamics while sidestepping degenerate cases. Four variations of the Okun's law—the gap, difference, dynamic version, and augmented production function versions—are applied to estimate the Okun's coefficient. In order to measure output and unemployment gap, Hodrick-rescott (HP) filter is also used. The empirical results demonstrated that in case of Pakistan the law doesn’t hold as evidenced by the comparatively low coefficients obtained applying all four versions.

Does Democracy Come at a Fiscal Cost? Revisiting the Political Business Cycles in Pakistan

Niaz Ali, Muhammad Tariq, Muhammad Azam Khan — Tue, 02 Dec 2025 00:00:00 +0000

The role of electoral incentives on public spending patterns is particularly relevant in developing nations such as Pakistan as it has direct bearing on the issue of fiscal discipline and quality of governance. This study examines the role of electoral cycles on sectoral budgetary allocations at provincial level in Pakistan. Based on panel data of four provinces covering the years 1972-2018, the study uses a Fixed Effects (FE) model to determine dynamic variations in budgetary patterns. These findings are quite solid in favor of the Political Business Cycle (PBC) hypothesis with the results showing that government spending rises by a large margin (23 percentage points of GDP) in election years. It also shows that population development and openness to trade have impact of high magnitude that is positive when it comes to government expenditure, and unemployment level has no significant impact. The
evidence shows a greater requirement of fiscal policies and institutional limits so as to put down opportunistic expenditure of the incumbent governments. Pakistan ought to think about institutionalizing long-term rules-based budgetary plans at provinces level to curb discretional expenditure during elections. Opportunistic fiscal expansions could be hindered by legal provisions making statutory budget ceilings obligatory before elections. Lastly, adopting practices of participatory budgeting on a local government level would increase citizen involvement and responsibility, which would minimize the room on fruitlessly spending money based on political interests

The Money Market Stability: Exploring the Role of Uncertainty in Pakistan

Ayza Shoukat, Muhammad Abdullah — Tue, 02 Dec 2025 00:00:00 +0000

This study proposes an investigation into the relationship between money demand and economic uncertainty in Pakistan. This study extends the Keynes money demand function by including the optimal uncertainty index and analyzes the impact of uncertainty on the money demand. We employed annual data from 1990-2022 and ARDL for data analysis. We used money demand as the dependent variable, the world uncertainty index for Pakistan as a core explanatory variable, with other control variables. The empirical results indicate the existence of a long-run and direct relationship between uncertainty and money demand in Pakistan. The study also provides valuable implications for policymakers for a stable money market

Behavioral Intentions and Determinants of Consumer Preference for Islamic Banks in Faisalabad

Noreen Riaz, Hazoor Muhammad Sabir, Anam Shehzadi — Wed, 10 Dec 2025 00:00:00 +0000

The current study analyzed the Behavioral Intentions and determinants of consumer preferences about Islamic Banking in Faisalabad. The primary data for this study is collected from 230 consumers in 2024 from different Islamic Banks in Faisalabad region. To estimate the consumer’s preferences and satisfaction about Islamic banking, the study employs binary logistic regression model. The variable of consumer preference is dependent variable and in binary form. Moreover, awareness of Islamic banking, perceived sharia compliance and, trust in Islamic institutions are main independent variables of the study. According to the estimated results, the variable of respondent education, knowledge about the profit margin on Islamic bank, Awareness about service quality, insurance policy according to Shariah laws, leasing policy according to Shariah laws, deposit policy according to Shariah laws, bank charges, shows positive and significant relationship with the consumer preferences. Regarding demographic variables, the age of respondents, urban and rural region, marital status, gender, religion show positive but insignificant relation with the consumer preferences. On this research provide some suggestions and policy recommendations for concerned policy maker based on customer satisfaction and Knowledge in Islamic banking and shariah compliance.

Social Protection Analysis on Labor Market of Pakistan

Tayyaba Faaiz, Hafsa Bibi, Naseem Akhtar, Mahnoor Fatima — Wed, 10 Dec 2025 00:00:00 +0000

Social security is seen as a fundamental human right. The aim of this study is to explore the effect of social protection on the labor market dynamic. This study is based on the HIES data set from 2018-19. Binary logistic regression is used to estimate the parameters of the labor force participation model. This study found that beneficiaries of social protection programs have a negative trend toward labor force participation in Pakistan. In addition, it is observed that some social indicators like age, the rural living region, and male household head significantly effect on labor force participation. This study also attempts to fill the gap by examining the effect that LFP on educational attainments. The study attempts to highlight the effect of social protection on LFP at the provincial level. The results explore the positive effect on labor force participation of beneficiaries by different age categories. Female labor force participation of grant receivers in Pakistan is still below as compared to males. The results show that the impacts of higher educated people on the labor force are low as compared to uneducated. The study concludes by lying out some recommendations.