FISCAL IMBALANCE: THE LINK BETWEEN PAKISTAN'S BUDGET DEFICIT, INFLATION AND UNEMPLOYMENT

Abstract

Here the purpose of policy making is getting the proper level of Macro economy variables, governments attempt to eliminate the barriers on the way of their development, the most significant variables of Macro economy representative a government growth are common level of prices, inflation and unemployment rate. For getting a enviable rate of inflation and unemployment is only achievable by a correct policy making. The main instrument that governments own for such a policy making is budget. It is attempted at this juncture in to study the effect of budget deficit on inflation and unemployment. So, the hypothetical formation of the research is represent by Keyns theory, and three models are applied to guesstimate essential functions and multi-variable linear functions which measure the cause of each one independent variable on dependent ones. The results show that budget deficit has a consequential effect on inflation and unemployment in Pakistan economy.