Dynamic Properties of an Aggregate Econometric Model of Pakistan's Economy * (FISCAL AND MONETARY Issues) (Report‪)‬

I. INTRODUCTION The use of econometric models for policy planning and decision-making is wide-spread in many developed as well as developing countries. One of the most vexing problems of such an exercise is to construct a model that could adequately reproduce the dynamic behaviour of an economy. The recent experience in modelling has shown that policy objectives could be achieved only by recognising the complex relationship between real and monetary variables. Such an integrated framework could be used not only to compute impact and dynamic multipliers and to determine the stability of the model, but also to evaluate the relative importance of fiscal and monetary policies.