Oil Price volatility, Macroeconomic variables and Economic growth: Pakistan a Case-in-Point

Abstract

This research analysis the effect of oil price volatility and macroeconomic variables (Trade balance, private sector investment and public sector investment) on economic growth of Pakistan. Linear regression describes the Public sector investment and Trade Balance has significant and oil price volatility and private sector investment has insignificant effect on gross domestic production of Pakistan. Johenson co integration test described the long run relation among the variables. Vector Auto regression, impulse response function and variance decomposition conclude that effect of variables was stable within 10 years and the major part on the variable is due to itself rather than other variables.