This study investigates the business cycle characteristics for Pakistan using three sets of
variables namely expenditure components of GDP, nominal variables and real variables.
The findings reveal that the volatility of expenditure components are greater than GDP
during the full sample of 1973 to 2015. Whereas, in the Pre-SAP and Post-SAP periods
i.e. 1973-1988 and 1989-2015, real variables and nominal variables show more volatility
than GDP. And, in terms of co-movement, expenditure components of GDP showed
strong pro-cyclicality and relationship with GDP against other sets of variables.
Moreover, the nominal variables show positive persistence and the business cycles
caused by it, lasting for a long time against real variables and expenditure components
of GDP. Furthermore, the results show that the correlation between CPI and GDP
across all periods is counter cyclical. The stability test results show that business cycles
features remained stable during two time periods.
1-Niaz Ali MS Economics, Department of Economics, Abdul Wali Khan University Mardan, KP, Pakistan2-Muhammad Tariq Assistant Professor,Faculty of Business & Economics,Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.3-Asia Baig Demonstrator, Department of Economics, Abdul Wali Khan University, Mardan, KP, Pakistan.