Impact of Oil Prices and Other Macro Economic Variables on GDP

3778 Words16 Pages
1. Abstract
The objective of the study is to measure the impact of changing oil prices, and other macro economic variables like consumption, government expenditures and average exchange rates on Gross Domestic Product-GDP in the context of Pakistan’s economy. The study is secondary data based and the observation is 150 with five variables and 30 years of data. The data is taken from World Bank,, State Bank of Pakistan, Economic Survey of Pakistan, Federal Reserve Bank of America, Federal Bureau of Statistics Pakistan, Pakistan Development Review, Federal Board of Revenue, OPEC and Euro Journal. First the stationary of the variables were checked by augmented dickey fuller-unit root test and data. All variables were
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From both points of view this puts additional burden on the next generation who has to return this borrowed money in the future period of time. This is against the principal of sustainable development. So for sustained development-developing today’s world without compromising the needs of the future generations’ government to gradually remove this subsidy to decrease allocative and productive inefficiency. 2. Introduction
Economics is the managnment of scarce resources. We live in the world of scarcity and. Where from basic necessity to luxury even the human being is a scarce commodity. So in order to uncertainity use at the optimum level, we have to use the scarce resources as efficient as possible. Crude oil is a scarce commodity in the world. Its Elasticity of demand and supply both are less elastic.Because of demand and supply factors and also because of other intervening variables like cartel, hoarding, supply shocks etc., day by day prices are increasing and causing demand pull as well as cost push inflation.
In a country like Pakistan international price hike not only causes imported cost push inflation but also demand pull inflation. Actually Compressed Natural Gas CNG and Liquified Petrolium Gas LPG are very poor susbtitutes of petrol. So as international price increases, this leads to lacal inflation in the economy, leading to fall in the foreign exchange reserves as foreign currency becomes short
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