Abstract:
The intricate nature of the political infrastructure determines the
relationship between states and markets whether it is in a form of a
centralised state, regulated market (Pakistan); or decentralised state,
unregulated market (US). This paper will examine the relation between
fiscal deficit and economic growth of Pakistan, by looking at the data for
30 years from 1980 to 2010. The study will examine the association of
some of the key macroeconomic variables like non-Development
Expenditure, Development Expenditure, Inflation, Foreign Debt,
Domestic Debt, Foreign Portfolio Investment, Tax Revenue, and non-Tax
Revenue with the country’s fiscal deficit and their effect on its economic
growth. The role that the Pakistani state has played through its various
policy decisions to manage the fiscal deficit, and how these have had
negative implications for the economy will be also be looked at.
