p.15
Fiscal Deficit and Its Impact
What does the Pakistan Economic Survey (2013–14) provide?
It provides an overview of the economic situation and fiscal policies in Pakistan.
p.13
Interest Rate Influence on Debt
How does the real interest rate affect public debt in Pakistan?
The real interest rate has a positive and significant impact on escalating public debt, with higher rates leading to increased borrowing costs.
p.6
Debt Sustainability Analysis
What does the rejection of the null hypothesis in the context of the ARDL model imply?
It implies the existence of a long-run relationship among the variables.
p.10
Determinants of Public Debt
How do higher interest rates affect the cost of borrowing in relation to public debt?
Higher interest rates lead to an increased cost of borrowing, contributing significantly to accumulating more loans to service debt obligations.
p.1
Determinants of Public Debt
What are the main driving forces for increasing the debt burden in Pakistan?
The main driving forces are fiscal indiscipline, rising costs due to exchange rate depreciation, and higher interest rates.
p.6
Debt Sustainability Analysis
How is the stock of public debt to GDP calculated according to the provided equations?
By dividing the debt equation by nominal GDP.
p.11
Debt Sustainability Analysis
What diagnostic statistics are employed to validate the findings from the econometric model?
CUSUM, Breusch-Godfrey Serial Correlation test, Breusch-Pagan-Godfrey test for Heteroskedasticity, and Hausman’s test of exogeneity.
p.7
ARDL Approach for Debt Dynamics
What is the significance of a mix order of integration in data analysis?
For mix order of integration data, ARDL is the natural choice to examine the long- and short-run relationship between the variables.
p.3
Composition of Domestic and External Debt
What is the current reliance of Pakistan on domestic debt?
Pakistan is heavily relying on domestic debt, which constitutes almost two-thirds of gross public debt.
p.2
Composition of Domestic and External Debt
What is a significant gap in the existing literature on public debt in Pakistan?
The literature primarily focuses on external debt and lacks comprehensive studies on the dynamics of total public debt and its sustainability.
p.13
Historical Data Analysis (1975-2021)
What historical trend has been observed regarding Pakistan's public debt stability?
Historically, Pakistan's public debt has been instable and explosive for most years, attributed to fiscal deficits and external account problems.
p.9
Determinants of Public Debt
How does exchange rate depreciation affect Pakistan's debt burden?
A 1 percent depreciation contributes to increasing debt obligation by almost 1.43 percent.
p.4
Composition of Domestic and External Debt
How did the composition of domestic debt change from 2019 to 2021?
From 2019 to 2021, permanent debt became the major constituent of total domestic debt, followed by floating debt.
p.3
Fiscal Deficit and Its Impact
How do fiscal pressures affect the financial performance of companies at the micro level?
Studies validate the positive impact of fiscal pressures in improving the financial performance of companies at the micro level.
p.8
Debt Sustainability Analysis
What does the F-statistics value of 4.92 indicate in the context of cointegration?
It is greater than the upper bound value at 5 percent level of significance, implying rejection of the null hypothesis of no cointegration.
p.8
Determinants of Public Debt
What does the presence of significant correlations among regressors suggest?
While some regressors have significant associations, they are not threatening concerning multicollinearity due to time series data properties.
p.2
Debt Sustainability Analysis
What does the current research aim to determine regarding public debt in Pakistan?
The research aims to determine the important factors influencing public debt dynamics and evaluate debt sustainability from 1975 to 2021.
p.15
Public Debt Dynamics in Pakistan
What is the relationship explored by Saeed S and Islam T in their research?
They explore the nexus between public debt and economic growth in South Asia.
p.12
Determinants of Public Debt
What factors contributed to the explosive nature of public debt in Pakistan during the 1990s?
Significant increase in fiscal deficit, external account problems, rapid depletion of foreign exchange reserves, and high inflationary pressures.
p.13
Determinants of Public Debt
What are the main causes of rising debt burden and instability in Pakistan's public debt?
Fiscal indiscipline, exchange rate depreciation, and high interest rates are the main causes of rising debt burden and instability.
p.4
Composition of Domestic and External Debt
What constitutes the largest part of the domestic debt portfolio in Pakistan during 2011–2018?
Floating debt constitutes the largest part of the domestic debt portfolio during 2011–2018.
p.5
Composition of Domestic and External Debt
What is included in the vector of control variables X in the empirical model?
Output gap (Gap) and non-interest current account balance as a percentage of GDP (NICAB).
p.8
Determinants of Public Debt
What does the variance inflation factor (VIF) indicate about multicollinearity in the model?
The VIF values for all variables are less than five, indicating no problem of multicollinearity.
p.8
Debt Sustainability Analysis
What is the purpose of the ADF unit root test in the study?
To determine the stationarity of the variables at level and first difference.
p.3
Interest Rate Influence on Debt
What monetary policy is the State Bank of Pakistan pursuing to address inflation?
The State Bank of Pakistan is pursuing a tight monetary policy to curb the ever-increasing inflation.
p.14
Public Debt Dynamics in Pakistan
What does the Pakistan Economic Survey (2021-22) provide insights on?
It provides an overview of the economic conditions and public debt situation in Pakistan.
p.14
Debt Sustainability Analysis
What is the main concern of the paper by Ejaz and Javid regarding Pakistan's debt?
They assess the sustainability of Pakistan's debt burden and its implications for the economy.
p.5
Public Debt Dynamics in Pakistan
What empirical model is primarily employed in the study of public debt dynamics in Pakistan?
The public debt dynamics model developed by Mupunga and Raux.
p.1
Debt Sustainability Analysis
What does the debt sustainability analysis reveal about public debt in Pakistan?
The debt sustainability analysis reveals the instability of public debt for the entire study period except for a few years.
p.12
Fiscal Deficit and Its Impact
What role does primary deficit play in the dynamics of public debt in Pakistan?
An increase in primary deficit has a strong bearing on debt dynamics and has acted as a catalyst for rising debt levels.
p.10
Determinants of Public Debt
What are the insignificant contributors to the rising debt level of Pakistan identified in the analysis?
The output gap, noninterest current account balance (NICAB), and seignorage are found to be insignificant contributors to the rising debt level.
p.11
Debt Sustainability Analysis
What does the CUSUM test graph indicate about the model's stability?
The recursive estimates are within the bounds, indicating stability of the model.
p.11
Debt Sustainability Analysis
What does Hausman’s test establish regarding the regressor?
It establishes the weak exogeneity of the regressor, implying no problem of endogeneity.
p.11
Debt Sustainability Analysis
What contributed to the stability of public debt during the period of 2002–2007?
A relatively strong fiscal position of the country along with a sustainable external position.
p.15
Debt Sustainability Analysis
What concept do Ghosh AR et al. discuss in relation to advanced economies?
They discuss fiscal fatigue, fiscal space, and debt sustainability.
p.14
Debt Sustainability Analysis
What methodology do Chandia and colleagues use in their comparative study of Pakistan and India?
They use a debt dynamics equation approach to assess public and external debt sustainability.
p.13
Exchange Rate Depreciation Effects
What is the impact of exchange rate depreciation on Pakistan's public debt?
Exchange rate depreciation increases the debt burden by raising the cost of borrowing and the value of external debt in local currency.
p.12
Determinants of Public Debt
Which macroeconomic factors were identified as significant contributors to the rising debt burden in Pakistan?
Fiscal imbalances, changes in interest rates, and exchange rate fluctuations.
p.10
Debt Sustainability Analysis
What role does seignorage play in the context of public debt dynamics?
Financing budget deficits through seignorage causes inflation, which leads to a tight monetary policy stance by the Central Bank, increasing interest rates and domestic debt servicing costs.
p.3
Determinants of Public Debt
What is the impact of fiscal pressures on debt levels at macro levels?
Fiscal pressures result in escalating debt levels for countries when examined at macro levels.
p.7
Debt Sustainability Analysis
What is required for the stability of public debt?
A primary balance surplus is required to at least cover the interest payments due.
p.8
Debt Sustainability Analysis
What does the Jarque-Bera statistic indicate about the normality of the errors in the model?
The errors of the model follow the assumption of normality.
p.15
Determinants of Public Debt
What do Abiad MA and Ostry MJ analyze in their work?
They analyze primary surpluses and sustainable debt levels in emerging market countries.
p.14
Debt Sustainability Analysis
What do Ncube and Brixiova discuss in their 2015 paper?
They discuss public debt sustainability in Africa, focusing on building resilience and the challenges ahead.
p.1
Determinants of Public Debt
What is the main focus of the study on public debt in Pakistan?
The study aims to explore the important factors that influence public debt dynamics and evaluate its sustainability in Pakistan.
p.9
Determinants of Public Debt
What is the impact of a 1 percent increase in primary deficit on debt to GDP in Pakistan's long run?
A 1 percent increase in primary deficit leads to an increase in debt to GDP by 0.95 percent.
p.5
Debt Sustainability Analysis
In the empirical model, what does ΔD represent?
The change in the total public debt as a percentage of GDP.
p.8
Determinants of Public Debt
What is the main observation regarding the distribution of the variables in the model?
None of the series deviate from normal distribution except for the interest rate.
p.3
Debt Sustainability Analysis
What factors influence debt dynamics according to the panel study by Campos et al.?
Debt dynamics are explained by changes in exchange rate, interest rate, inflation, and growth rate of the economy.
p.3
Debt Sustainability Analysis
What does the literature suggest about the sustainability of public debt in Pakistan?
The literature has mostly found the debt levels to be unsustainable or weakly sustainable in the case of Pakistan.
p.11
Debt Sustainability Analysis
What period shows stability in public debt according to the results from 1982–2021?
The public debt retained a momentum of stability only during the 5-year period from 2002 to 2007.
p.11
Debt Sustainability Analysis
What was the impact of the appreciation of the domestic currency on public debt?
It helped reduce the debt burden of the country and contributed to the sustainability of public debt.
p.15
Public Debt Dynamics in Pakistan
What does Sheikh MR et al. analyze in their empirical study?
They analyze the relationship between domestic debt and economic growth in Pakistan.
p.6
ARDL Approach for Debt Dynamics
What approach does the study use to examine the impact of explanatory variables on the change in debt to GDP ratio?
The study employs the ARDL bounds testing approach.
p.12
ARDL Approach for Debt Dynamics
What does the ARDL model indicate about the impact of fiscal deficit on public debt levels in Pakistan?
It shows a significant positive impact of fiscal deficit, real interest rate, and exchange rate depreciation on rising public debt levels.
p.10
Debt Sustainability Analysis
What does a negative and significant error correction term indicate in the debt dynamics model?
It indicates a reverse correction mechanism and implies a convergence of the system towards stability in case of any disequilibrium.
p.6
Composition of Domestic and External Debt
What do the variables π t and g t represent in the context of public debt?
π t represents the inflation rate, and g t represents the growth rate of real GDP.
p.4
Exchange Rate Depreciation Effects
What role does domestic currency depreciation play in public debt?
Significant domestic currency depreciation adds to the external debt burden, escalating the public debt.
p.2
Debt Sustainability Analysis
Why is it important to assess debt sustainability in Pakistan?
Assessing debt sustainability is crucial due to the high levels of public indebtedness and the threat of insolvency.
p.15
Fiscal Deficit and Its Impact
What is the focus of the study by Batrancea L. regarding fiscal pressure?
The study examines the impact of fiscal pressure on equilibrium in electricity, gas, and oil companies listed on the New York Stock Exchange.
p.14
Fiscal Deficit and Its Impact
What is the focus of the paper by Ayyoub, Chaudhry, and Yaqub regarding Pakistan?
They examine the debt burden of Pakistan and propose remedies for future challenges.
p.1
Determinants of Public Debt
What significant factors were found to impact public debt in Pakistan?
The study finds a positive and significant impact of fiscal deficit, exchange rate depreciation, and interest rate on public debt.
p.6
Debt Sustainability Analysis
What does the error correction term (ECT) indicate in the error correction model?
It indicates how much of the disequilibrium from the previous period is being corrected in the current period.
p.7
Debt Sustainability Analysis
What does φ t < 1 imply about public debt to GDP ratio?
It implies that the public debt to GDP ratio ultimately falls to a predetermined threshold level.
p.4
Exchange Rate Depreciation Effects
What impact does the depreciation of the domestic currency have on external debt?
Depreciation of the domestic currency raises the external debt cost as it needs to be repaid in foreign currency.
p.11
Debt Sustainability Analysis
What do the results of the serial correlation and heteroskedasticity tests imply?
They are unable to reject the null hypothesis of no autocorrelation and homogeneity, indicating that the estimated parameters are efficient.
p.7
Interest Rate Influence on Debt
What does the real effective interest rate R t represent?
It is obtained by dividing the interest payments in the current period by the previous period’s debt stock.
p.14
Determinants of Public Debt
What critique do Herndon, Ash, and Pollin present regarding Reinhart and Rogoff's findings?
They argue that high public debt does not consistently stifle economic growth, challenging the conclusions of Reinhart and Rogoff.
p.2
Fiscal Deficit and Its Impact
How does high public indebtedness affect economic growth in Pakistan?
High levels of indebtedness can hinder economic growth, as indicated by extensive literature on the subject.
p.14
Debt Sustainability Analysis
What does the research by Ejaz and Hyder propose regarding debt sustainability in Pakistan?
They propose a fan chart approach to analyze debt sustainability in Pakistan.
p.1
ARDL Approach for Debt Dynamics
Which approach is utilized to study debt dynamics in the research?
The ARDL approach is utilized to study the short- and long-run debt dynamics using historic data from 1975 to 2021.
p.5
Determinants of Public Debt
What are the additional control variables used in the empirical testing of debt dynamics?
Output gap and non-interest current account balance.
p.6
Debt Sustainability Analysis
What is the significance of the budget constraint in assessing debt sustainability?
It helps determine whether the debt is stable by incorporating external financing and currency depreciation.
p.9
Debt Sustainability Analysis
What does the correlation matrix indicate about the relationship between primary balance and debt?
The correlation matrix shows a negative relationship between primary balance and debt, indicating fiscal indiscipline's impact on debt dynamics.
p.7
Historical Data Analysis (1975-2021)
What econometric technique is employed to check the stationarity of the variables?
The ADF test is employed to check the stationarity of the variables.
p.7
Determinants of Public Debt
What does the primary balance to GDP measure?
It is calculated as the ratio of total revenue minus noninterest expenditure to GDP.
p.3
Exchange Rate Depreciation Effects
How does exchange rate depreciation affect Pakistan's debt servicing capacity?
Exchange rate depreciation is exhausting the debt servicing capacity of Pakistan.
p.11
Debt Sustainability Analysis
Which individual years showed exceptions with Phi less than 1?
1987, 1990, 2010, 2014, 2016, and 2020.
p.15
Determinants of Public Debt
What do Chandia KE and Javid AY compare in their analysis?
They conduct a comparative analysis of the contributing factors in debt and deficit in Pakistan, India, and Bangladesh.
p.12
Debt Sustainability Analysis
What was the trend of public debt stability in Pakistan from 2011 to 2021?
Public debt showed instability for the majority of the years, except for 2014, 2016, and 2020, largely due to fiscal imbalances and rapid currency depreciation.
p.10
Determinants of Public Debt
What is the relationship between economic growth and public debt in Pakistan?
The relationship is contrary to theoretical predictions; an increase in economic growth is associated with an escalation of debt, but this association is found to be insignificant.
p.5
Debt Sustainability Analysis
What does the variable PB represent in the empirical model?
The primary balance as a percentage of GDP.
p.7
Debt Sustainability Analysis
What condition leads to an explosive case for public debt to GDP ratio?
If φ t > 1, it means the ratio of public debt to GDP would explode from the predetermined threshold level.
p.3
Determinants of Public Debt
What are the main determinants of debt accumulation in Pakistan identified by Bilquees and others?
The primary deficit and exchange rate changes are identified as the main determinants of debt accumulation in Pakistan.
p.3
Composition of Domestic and External Debt
What has been the trend in domestic and external debt growth in Pakistan over the last decade?
Domestic debt grew at a rate of 17.3 percent while external debt grew at 11.6 percent over the last decade.
p.14
Determinants of Public Debt
What is the main argument of Reinhart and Rogoff in their 2010 paper regarding public debt?
They argue that high levels of public debt can negatively impact economic growth.
p.14
Public Debt Dynamics in Pakistan
What is the focus of Mupunga and Le Roux's analysis in their 2016 study?
They analyze the theoretical and empirical foundations of public debt dynamics in Zimbabwe.
p.14
Debt Sustainability Analysis
What does the study by Mahmood, Rauf, and Ahmad analyze?
It analyzes public and external debt sustainability in Pakistan from the 1970s to the 2000s.
p.5
Determinants of Public Debt
Which key macroeconomic variables are attributed to changes in public debt according to the empirical model?
Primary balance, real GDP, exchange rate, and real interest rate.
p.13
Macroeconomic Policy Recommendations
What recommendations are made to stabilize Pakistan's public debt?
Pakistan needs to implement structural reforms in the tax system, finance current account deficits from non-debt creating inflows, and enhance export earnings.
p.9
Determinants of Public Debt
What role does primary balance to GDP play in Pakistan's debt dynamics?
Primary balance to GDP is a significant contributor to escalating debt burden in Pakistan.
p.8
Determinants of Public Debt
What does the Central Limit Theorem imply about the sum of random variables?
The sum of random variables tends to be normal.
p.2
Public Debt Dynamics in Pakistan
What has been the trend of Pakistan's debt to GDP ratio from 2010 to 2021?
The debt to GDP ratio in Pakistan increased from almost 60 percent in 2010 to 72 percent in 2021.
p.11
Debt Sustainability Analysis
What does the JB test for normality confirm about the residuals?
The null hypothesis of normality of residuals cannot be rejected, implying that errors follow the assumption of normality.
p.11
Debt Sustainability Analysis
What trend was observed in Pakistan's economy starting in 2002?
The economy started gaining momentum after a lost decade in the 1990s, leading to impressive growth performance.
p.15
Historical Data Analysis (1975-2021)
What methodology do Pesaran MH et al. propose for analyzing level relationships?
They propose bounds testing approaches.
p.15
Debt Sustainability Analysis
What aspect of fiscal sustainability do Afonso A and Jalles JT investigate?
They investigate time-varying fiscal sustainability in the Euro area.
p.9
Determinants of Public Debt
What is the effect of a 1 percent rise in real interest rate on debt levels in Pakistan?
A 1 percent rise in interest rate leads to an increase in debt level by 1.57 percent.
p.4
Composition of Domestic and External Debt
What is the primary source of external debt in Pakistan?
The primary source of external debt is multilateral lenders, followed by commercial loans.
p.4
Determinants of Public Debt
What has contributed to the rising debt burden in Pakistan?
The rising debt burden is attributed to domestic borrowing and deteriorating debt service obligations due to rising interest rates.
p.2
Determinants of Public Debt
What are some core factors affecting the debt dynamics in Pakistan?
The core factors include primary balance, interest rate, exchange rate, economic growth, output gap, and inflation.
p.7
Composition of Domestic and External Debt
What is the role of seignorage in the context of public debt?
Seignorage measures the change in monetary base as a percentage of GDP.
p.2
ARDL Approach for Debt Dynamics
What methodology does the current study utilize for analyzing debt dynamics?
The study utilizes the novel dynamic debt modeling proposed by Mupanga & Roux in the context of Pakistan.
p.15
Debt Sustainability Analysis
What is the main finding of Babu JO et al. regarding domestic debt?
They investigate the effect of domestic debt on economic growth in the East African community.
p.15
Composition of Domestic and External Debt
What is the focus of the study by Tahir N and Tahir P regarding Pakistan?
The study focuses on debt and fiscal responsibility in a federal structure.
