Abstract
The current study examines the impact of various fiscal policy variables on the economic growth rate of Pakistan by utilizing a time series data of the country from 1990 to 2019.In order to evaluate fiscal policy effectiveness in case of Pakistan, the study at hand performs a disaggregate analysis by constructing a system of 5endogenous variables in a k dimensional vector. The implementation of Cholesky ordering to generate the VAR output, in the study it is revealed that growth rate of the country can be influentially accelerated by allocating more budget for development expenditure as compared to current expenditures. This phenomenon illustrates the effectiveness of expansionary fiscal mechanism to enhance the economic evolvement of the country’s study also indicates that successful tax revenue collection by the government is also an essential component for augmented economic output. Keywords: GDP, Development, expenditures, Current, expenditures, Tax revenue, on-tax revenue, VAR
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