A Time Series Analysis of Forieng Aid and Income Inequality in Pakistan

A Time Series Analysis of Forieng Aid and Income Inequality in Pakistan

Sharafat Ali M. Phil. PhD

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Najid Ahmad M.Sc Economics

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Allama Iqbal Open University

Bahauddin Zakariya University

A Time Series Analysis of Forieng Aid and Income Inequality in Pakistan

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Abstract

Pakistan economy is one those economies that has received a huge amount of foreign aid. Foreign aid has been considered to help capital-deficient economies to fulfill the desired levels of finances to generate growth, increase employment and income, and furthermore, it helps to alleviate poverty levels in the recipient economies. Present study focuses on the analysis of impact of foreign aid on income inequality in Pakistan. Since time series data is used for the analysis so the ADF and Phillip-Perron unit root test are applied to find out each of the time series to be stationary at its first difference. Johansen contegration test and vector error correction models are employed to examine the long run and short run impacts of growth, foreign aid, foreign direct investment, and labor force participation rate on income inequality, respectively. The cointegration test results confirm negative impact of economic growth on income inequality whereas foreign aid, foreign direct investment and labor force participation rate are concluded to have inequality increasing impacts. The results are statistically significant.

References

48 Cites in Article

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Sharafat Ali. 2013. \u201cA Time Series Analysis of Forieng Aid and Income Inequality in Pakistan\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 13 (GJMBR Volume 13 Issue B5).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

Causality cointegration foreign aid foreign direct investment Growth rate labor force stationarity

Submission ReceivedDecember 12, 2012
Peer Review Double Blind
Handling Editor
Accepted January 4, 2013
Published January 15, 2013

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v1.2

Issue date

July 31, 2013

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Article Matrices

Total Score: 102

Country: Unknown

Subject: Global Journal of Management and Business Research - B: Economic & Commerce

Authors: Sharafat Ali, Najid Ahmad (PhD/Dr. count: 0)

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