Demographic Transition and Economic Growth in Pakistan: A Re-Visit Via TVP-VAR Approach
Keywords:
Vector Auto Regressive; Time Domain; Frequency DomainAbstract
Over the past few decades, economists have been debating the influence of demographic transition on economic growth. Three conflicting opinions characterize this issue: that population change a) limits, b) stimulates, or is c) unrelated to economic growth. In this paper, we assess the validity of these ideas by fitting two recently developed state of art time-varying VAR model-based approaches, known as DY12 and BK18, proposed by Diebold and Yilmaz (2012) and Barunik and Krehlik (2018), respectively. The empirical analysis is based on annual time series data from 1972 to 2020, and it investigates the directionality and degree of association between overall demographic transition and economic growth from a systematic perspective for Pakistan. It is expected that demographic trends, in accordance with the theory, matter for economic growth in the context of Pakistan. In addition, the findings will help document the overall connectedness in the short as well as in long run. Hence, the ramifications of these demographic tendencies are worth considering since they can be used to evaluate various policy initiatives.
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