ANALYZING HOW MONETARY POLICY, INTEREST RATES, AND INFLATION TOGETHER INFLUENCE PAKISTAN’S SHORT-RUN AND LONG-RUN PATTERNS OF OVERALL ECONOMIC GROWTH TRENDS.

Abstract

This paper looks at how monetary policy, interest rates, and inflation affected Pakistan's economy from 1980 to 2024. We used a quantitative, time-series research approach and looked at yearly data with multiple linear regression to see how these things are related to GDP growth in the short term.

The data shows inflation has a negative impact on GDP growth. Monetary policy and interest rates didn't seem to have much of an impact in the short term. The model explains about 18.3% of the change in GDP growth which means other things also play a role.

These findings show that keeping prices stable is important for economic growth in Pakistan. We suggest aiming for controlled inflation, gradual changes to interest rates, economic changes, being ready for crises, and making policy decisions based on data to help growth last.

This paper helps us understand how economic policies and growth work together in emerging economies and gives suggestions to policymakers in Pakistan.