DETERMINANTS OF POVERTY IN PAKISTAN

Abstract

This research is about the impact of determinants of poverty in Pakistan. In this paper five independent macroeconomics variables that are government expenditure, budget deficit, unemployment rate, exchange rate and inflation rate are studied. In methodology, we have applied the Ordinary Least Squares (OLS) method. The time series data is used which consist of 19 observation that is 1995 to 2013 which we collect from different sources such as (WDI) and (The Global Economy.Com). Through this model we inquired the effect of Government Expenditure, Budget Deficit, Unemployment Rate, Exchange Rate, and Inflation Rate on poverty in Pakistan. Government expenditure and budget deficit have inverse relationship while unemployment has a direct relationship with poverty in Pakistan. Furthermore in this model we seek the impact of inflation rate and exchange rate which help us show negative relationship with poverty while inflation has also a direct relationship with it. In this thesis all of the five variables have been used with three out of five have negative and the other two have a positive relationship with poverty. Theoretically we have proved the relationship of these macroeconomics variables with the help of reference articles by collecting historical data according to Pakistan perspective on these variables.