THE IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH: A COMPREHENSIVE STUDY OF BALOCHISTAN PAKISTAN

Abstract

This research investigates how monetary policy affects economic expansion in Pakistan's Balochistan, with data spanning 1990 to 2022, a province dealing with serious economic difficulties. In order to evaluate how well monetary policy is influencing Balochistan’s economic performance, the analysis primarily focuses on important monetary policy variables and indicators, such as interest rates, inflation, money supply, GDP growth rates, inflation rates, and investment levels. In order to capture the short-term and long-term dynamics of the link between monetary policy and economic development, the Autoregressive Distributed Lag (ARDL) bounds testing technique was developed. The results show a complicated relationship between economic growth and monetary policy. While there are certain beneficial benefits of monetary policy on economic growth, such as its overall efficacy, these advantages are frequently lessened by inflationary difficulties such political instability, a lack of adequate financial infrastructure, external shocks, and investment volatility. The study contrasts eras when restrictive policies led to economic slowdowns with periods of notable expansion associated with favorable monetary circumstances. The results ultimately point to the necessity of a more tailored, equitable, and flexibleframework for monetary policy in order to meet the unique economic requirements of Balochistan.