The Impact of Interest Rate on Economic Growth of Pakistan

Abstract

This study examined the impact of interest rate on economic growth of Pakistan. Explore the relationship between dependent variables Gross Domestic Product and independent variables interest rate, employed labour force, domestic investment and inflation. The annual time series data used from 1991 to 2018. The study also applied Ordinary Least Square (OLS) method to co-integration and to estimate the relationship between dependant variable and independent variables. The result of OLS method shows interest rate has negative and significance and employed labour force has positive and significant impact on economic growth of Pakistan. While the domestic investment and inflation have insignificant.