Fiscal and Monetary Policy Interaction in Pakistan using DSGE Model

Pakistan has a very tense history of the strained relationship between fiscal and monetary authority. The objective of this thesis is to investigate the interaction between fiscal and monetary policy using small scale open economy dynamic stochastic general equilibrium model for Pakistan. This thesis explores the responsiveness of monetary policy to fiscal policy vis-à-vis explore the fiscal implications of monetary policy. The findings of this dissertation has very interesting insights for the economic managers, treasury benches, legislators and central bank.