Lumping Together Democracy and Dictatorship: Has Macro Dynamics of Poverty Remained Steady in Pakistan

Abstract

Abstract. In this study we check the relationship between macroeconomics variables with poverty. We select head count ratio proxy of poverty as dependent variable and GDP, unemployment rate, literacy rate, rural population and worker remittances as independent variables. For the analysis of the data we take time series data from 1978-2011 and established the long run and short run relationship between dependent and independent variables. First of all we check the normality of the data by descriptive statistics, further we check the stationarity of the data by applying ADF test. For long run relationship between dependent and independent variables we applied FMOLS techniques and relationship in short run checked by EMC methods. Results of the data shows, macroeconomic variables especially literacy rate and rural population have been major factors that affect poverty levels in Pakistan. GDP has a negative and insignificant impact on poverty. Literacy rate is positivly and significantly related with poverty. Worker remittances have negative and significant impact on poverty, while rural population has negative and significant impact on poverty. Unemployment has positive and insignificant impact on poverty in Pakistan. Keywords. Poverty, Macro economy, Capability. JEL. E20, E22, E29.