Export instability,income terms of trade instability and growth: Evidence from Pakistan

The study explores the causal relationship among export instability,income terms of trade instability and economic growth in pakistan. by using the cointegration analysis and vector error correction model for the period 1960 to 2008,the study demonstrates that there exists a long run equilibrium relationship among export instability,income terms of trade instability,investment and economic growth. the granger causality test results indicate that in the short run there exists a uni-directional causality running from export instability and income terms of trade instability to economic growth. however,in the long run all the variables of the study cause one another. this finding is suggestive of closer coordination among the monetary,fiscal and trade policies in pakistan.