Impact of Inflation and Interest Rate on Economic Growth in Pakistan

ABSTRACT

The aim of this paper is to examine the impact of major economic variables includes inflation rate and interest rate on economic growth of Pakistan. The secondary data has been taken for the years from 2008 to 2017. The results from linear regression model describe that inflation rate spread negative impact on Pakistan’s economic growth while interest rate is found positively significant on the economy. Therefore, all the variables that have been selected show less impact on economic growth of the country as compared to other factors that put a solid impact on Pakistan’s economic conditions. The type of influence of these variables of the economy varies from country to country such as developed economies and developing economies. The developing economies like Pakistan suffering from different problems such as energy & water shortages, political instability, lack of policy implication, continuous increase in inflation, security concerns, burden of foreign debt, and misbalance between import and export payments etc.

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