Oil Price Hike, Debt Burden and Poverty in Pakistan

Abstract

Hiked oil prices have always heightened debt burden of an economy and poverty too. Pakistan as a developing country has also been facing this crisis since its inception. Therefore, in this study the data of the probed variables has been collected from the period ranging 1972-2019. Auto-regressive Distributive Lag Model has been employed as a methodology, for throwing light on the results of the short run along with the long run. For inspecting the research, head count ratio is used as the dependent variable. Whereas, factors such as gross domestic product, foreign direct investment, infant mortality rate, literacy rate, unemployment rate, external debt, oil prices and investment are used as the independent ones. The results of the study disclose that the coefficient of all independent variables have a positive association with poverty in both the long and short run except GDP and investment. However, the GDP and investment coefficients are found to be significant in short run and insignificant in the results of long run. The study depicted several trends with the passing years and suggested some policy measures which, if adopted, might lead to clear the bleak picture of economy.