CONTENTS
• INTRODUCTION
• LITERATURE REVIEW
• DATA AND METHODOLOGY
• EMPIRICAL RESULTS
• CONCLUSION
• REFERENCES
• APPENDIX
Introduction:
Consumption is one of the basic needs of the human being. Where economic is the social science in which we study how to fulfill our basic needs with unlimited desires and scarce resources. These days’ major issue of generally any economy and particularly Pakistan economy is printing of lot of money i.e. increase in money supply. Now the question is how this increase in money supply affects the consumption expenditure in Pakistan? To get the answer of this question many scholars and authors such as Mushtaq, Ghafoor, Abedullah and Ahmed (2011), Choudhry and Noor (2009) and Zakaria (2007) examine the impact of money supply growth on consumption expenditure and found positive relationship between the both. Empirical studies by scholars like Mthuli Ncube and Eliphas Ndou (2011) have shown that there is no direct impact of money supply on consumption expenditure rather it effects the spending of consumer indirectly. Consumption can be changed due to change in interest rate i.e. initially change due to change in money supply. There are two ways through which interest rate can effect consumption expenditure one is direct and other is indirect way. Direct method shows direct impact of interest rate on consumption. The indirect method further operates in two ways. First change in interest rate has strong impact on demand of housing it means it will affect prices of housing so that shows change in wealth of household. In second steps that further lead to decrease in the consumption expenditure of people. The direct effect shows that increase in interest rate has income ...
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...nding in South Africa: An SVAR Approach, Working Paper (133) African Development Bank Group; JUNE 2011
http://data.worldbank.org/country/pakistan
Appendix:
Dependent Variable: CONS
Method: Least Squares
Date: 05/28/13 Time: 16:03
Sample: 1991 2011
Included observations: 21
Variable Coefficient Std. Error t-Statistic Prob.
C 0.127347 0.731953 0.173983 0.8637
MS 1.018728 0.025931 39.28637 0.0001
R-squared 0.987839 Mean dependent var 28.87062
Adjusted R-squared 0.987199 S.D. dependent var 0.873800
S.E. of regression 0.098862 Akaike info criterion -1.699796
Sum squared resid 0.185699 Schwarz criterion -1.600317
Log likelihood 19.84785 Hannan-Quinn criter. -1.678206
F-statistic 1543.419 Durbin-Watson stat 0.587188
Prob(F-statistic) 0.0001012
money.In the line “To be made of it !” Gioia uses a hyperbole by referring to rich people as being
Classical economist’s theory of monetary policy was thought to only affect prices and wouldn’t affect truly important factors such as employment. It was a major concern that if the government was to finance its’ spending only by increasing how much money was produced then it would have the same out come as expansionary monetary policy.
people and business to spend and invest more money. Since the interest rate is low, firms and people will tend to spend rather than put it into bank. This is because they think it is not worth to put their money in the bank when the interest rate is so low. Besides, low interest rate also encourage firms to get a loan from the bank with a very low interest rate. This could increase the consumer consumption.
"Money", a poem written by Dana Gioia, not only shows how powerful money can be, but also explores how evil and toxic it can become. The first thing to notice before reading the poem "Money" is a quote at the top of the poem that states, "Money is a kind of poetry" by Wallace Stevens. When reading it you might fly by without noticing what he is truly trying to say. Dana Gioia is trying to get the reader to question the true meaning of the poem before you read it. There are many ways that the quote could be understood. Past or present poetry can be very powerful and it can inspire, influence or motivate someone to do anything. This is similar for money it can control someone's life making them do things they would not normally do, it is a very powerful thing. Money can be used for anything in today's world and so can the pen and paper if the right words are used.
...come worse off. That is due to the reason that an increase in the level of interest rate leads to a relatively smaller current consumption, since borrowing from the future is not the ideal solution because it has become more expensive than before. Generally for a borrower current consumption always falls while savings rise.
Kargar, J. (2004, January 1). Amazon.com in 2003. Journal of the International Academy for Case Studies, 33-52. Retrieved February 24, 2012, from ABI/INFORM Global. (Document ID: 1909313031).
In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004).
In 1956, Phillip Cagan wrote a classic article in which he developed a simple model for money demand. While the aim of Cagan’s article was to develop a theory for hyper-inflation, his model has been used far beyond this original application. Cagan-type money demand functions have become the standard base from which many monetary discussions begin. One such instance of its broader applications is seigniorage. The same year Cagan published his model, Martin Bailey, while at the University of Chicago with Cagan, expanded the Cagan money demand function to assess seigniorage, developing the well-known Bailey Curve (Bailey 1956).
Entering the 21st. Century – World Development Report 1999/2000. World Bank 2000. Oxford University Press. New York, NY 2000.
In the following report we have first tried to clear the concept of the multiplier then carried on with explaining various theoretical aspect of tax multiplier, government spending multiplier and planned investment multiplier. Then we have tried to compare the change in expenditure and change in GDP in Indian economy by providing data which was extracted through a secondary source.
Bureau of African Affairs. (2011). Background Note: South Africa. Retrieved March 28, 2011, from http://www.state.gov/r/pa/ei/bgn/2898.html
Finally, professor Prest considering the effect of price inflation, he concluded indicators of excess public revenue over expenditureare both relatively to the GNPhe told that if the income of the people will raise they will also facing the price inflation because higher the income pays higher incometax, no matter whether the increase in income is real or not. On the other side of expenditure, if cost of the state is raising, people wanted to make heavy demand on the social services so the relative price effect are depending upon the inflation rate . For instance if the rise in money wages and the share of total wages cost rise then its pushes up the inflation in the public sector.
In this book Ferguson aims to create an understanding of the workings of the concept of development through the case study of the Thaba-Tseka Development Project. To achieve this he gives detailed accounts of the setting and conditions of the project, as well as emphasize where and how development practitioners went wrong in this particular case.
Schick, A., 1998. Why Most Developing Countries Should Not Try New Zealand Reforms, Prem Seminar Series, Public Sector Group, The World Bank.
Pakistan has all the major ingredients necessary to become a developed nation; it has a geo-strategic location, a generous availability of natural resources and a large population in the working age. Despite having the potential to turn itself into a developed country, Pakistan has not been able to fulfill its potential.