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• Open Access Article

  14 Pages Download PDF: Extending Okun's Law to encompass the governance-unemployment nexus: New Insights from PMG/ARDL Approach

  Extending Okun's Law to encompass the governance-unemployment nexus: New Insights from PMG/ARDL Approach

  Muhammad Umar Farooq, Abdul Majeed Nadeem, Qasim Ali

  2025-06-29 https://doi.org/10.36923/jcmi.v6i1.636

  This study has empirically aimed at estimating the short-and long-term dynamics of financial and institutional factors with respect to the unemployment rate in the case of the selected developing economies over the period of 1996-2023. The second-generation empirical analyses, such as cross-sectional dependence and unit-root analysis, support the use of pooled mean group regression analysis. The empirical outcomes of the pooled mean group regression have confirmed the existence of Okun’s law in the influence of a rise in control of corruption, government effectiveness, and political stability to reduce the unemployment rate in this region. Among the financial factors, the economic growth-unemployment rate nexus significantly validates the existence of Okun’s law. Further, the exchange rate is also highly significant in decreasing the unemployment rate in this region. However, the negative impact of the interest rate and the positive effect of broad money growth are surprisingly significant in affecting the unemployment rate and contradict the literature. Surprisingly, the institutional factors are more responsive to the unemployment rate compared with financial indicators. These outcomes suggest important policy implications regarding institutional and financial factors to control the unemployment rate in these economies

  pp. 68-81 Abstract views:187 Downloads:273

• Open Access Article

  32 Pages Download PDF: Unmasking the Dynamics: Drivers of the Shadow Economy in SAARC Countries

  Unmasking the Dynamics: Drivers of the Shadow Economy in SAARC Countries

  Abdul Saboor, Muhammad Ramzan Sheikh

  2024-06-14 https://doi.org/10.36923/jcmi.v5i1.569

  The study aims to investigate the determinants of the shadow economy in SAARC countries during the period from 1995 to 2021. The study uses three proxies for the shadow economy as dependent variables, which are the ratio of reserve to narrow money (Shadow-1), the ratio of narrow to broad money (Shadow-2), and the ratio of currency in circulation to broad money (Shadow-3), while trade, tax, unemployment, government final consumption expenditure (GFCE), governance index (GI), and economic freedom index (EFI) are used as independent variables. The study applies the second-generation panel unit root test and the method of moments-quantile regression (MM-QR) technique. The findings of the study are that, as theoretically expected, the independent variables, trade, tax, unemployment, and government final consumption expenditure (GFCE), have positive and significant coefficients, while the governance index (GI) and economic freedom index (EFI) have a negative and significant effect on the shadow economy in SAARC countries. The study suggests that economic freedom and governance quality should be improved, and government size, tax, and unemployment should be decreased to control the shadow economy in SAARC countries.

  pp. 16-47 Abstract views:195 Downloads:97

• Open Access Article

  17 Pages Download PDF: The Empirics of Okun’s Law Using Augmented ARDL: The Case of Pakistan

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

  Shah Khalid, Ibrar Hussain, Nafees Ahmad, Riaz Ahmad, Sajjadullah

  2025-12-02 https://doi.org/10.36923/jcmi.v6i2.646

  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.

  pp. 1-17 Abstract views:255 Downloads:128

• Open Access Article

  12 Pages Download PDF: Does Democracy Come at a Fiscal Cost? Revisiting the Political Business Cycles in Pakistan

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

  Niaz Ali, Muhammad Tariq, Muhammad Azam Khan

  2025-12-02 https://doi.org/10.36923/jcmi.v6i2.663

  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

  pp. 18-29 Abstract views:208 Downloads:104