The Role of Public Spending and Credit Disbursement in the Agriculture Sector of Pakistan

Abstract

The current study explores the role of public spending and credit disbursement in the agricultural production of Pakistan during the period 2000 to 2016. In this study, Agriculture Production Growth (APG) is the dependent variable while real GDP, government expenditure, labor force participation and agricultural credit are the independent variables. The stationarity of the data has been investigated through the ADF test. Following this, hypotheses were tested through the ordinary least squares method. In addition, the robustness of the results is ascertained by conducting an LM test and CUSUM stability tests. The findings showed that government expenditure and agriculture credit put expansionary effects on agricultural production in Pakistan. It is suggested that the government should increase expenditures in the agriculture sector for the development of agricultural sector production and economic development of the country.