Fiscal policy plays a significant role in achieving inclusive economic growth as it can reduce inequalities, mitigate poverty and generate productive employment opportunities by regulating public expenditures and taxes. Current research examines the role of fiscal policy in plummeting poverty, reducing inequality, generating productive employment and last but not the least in attaining broad based inclusive economic growth for Pakistan. Various components of government expenditure and taxes are evaluated by estimating multiple vector autoregressive (VAR) models and by computing elasticities on the basis of cumulative impulse response functions (IRFs). The analysis suggests that fiscal policy is not playing an effective role in promoting broad-based inclusive economic growth. The frail linkage between fiscal policy and inclusive economic growth is countermand to very essence and spirit of the former in a developing country like Pakistan.

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Ahmad, M. (2000) Estimation of Distribution of Income in Pakistan Using Micro Data. The Pakistan Development Review 39:4, 807–824.

Ahmad, Z. and Batul, T. (2013) Relationship among Poverty, Education Expenditure, and Education Status: Empirical Evidence from Pakistan Proceedings of the World Congress on Engineering & Computer Science. Vol. 1, p 1

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