An Empirical Study on Linkage between Monetary Instrument and Economic Growth in Pakistan: A New Evidence

This research is going to analyses the linkages between the monetary policy instruments which have a great influence on economic growth in Pakistan. Monetary policy a kind of demand management policy that deals with the stabilization and the economic growth of the economy with a high level of employment and a moderate price level. Analysis has been done by utilizing the time series data for the period 1975-2019. By testing the time series for unit root we have estimated the relationship with the ARDL model. The study has used Gross domestic product growth rate, Consumption expenditure, Inflation, Gross domestic saving, Gross national expenditure, money supply M2. It has been concluded that expansion in money supply and employment opportunities has a positive impact on growth both in the long and short run. It has been suggested govt. must consider the monetary policy to control the economic activity and to stabilize the economy both in the short and in the long run.