Budgetary Dilemmas in Pakistan: Costs and Benefits of Sustained Defense Expenditures
Abstract
The purpose of this paper is to assess the major macroeconomic impacts of defense expenditures on the Pakistani economy. This approach involves three interrelated steps. The first step identifies the economy's main macroeconomic patterns and trends with an emphasis placed on the major problems currently facing policy makers. In particular, what structural problems currently constrain the economy's growth? What policy options are available to moderate these difficulties? Which budgetary patterns are sustainable? The second step examines the manner in which defense expenditures have interacted with the economy. What are the interdependencies between defense and overall growth? Have defense expenditures contributed to the current structural imbalances? If so, in what manner? Have defense expenditures initiated macroeconomic change or simply reflected movements in the major aggregates? The third step, through the use of a macroeconomic model, assesses the main factors identified in steps one and two. Here our main interest is to assess the manner in which the Pakistani economy might have evolved if the government had adopted alternative budgetary programs. Did defense and nondefense expenditures affect the economy in a similar manner? If so, in what way? Based on the findings from these historical simulations, a series of forecasts are made to the year 2000. Here we are interested in examining alternative defense/nondefense expenditure patterns. Which types of expenditures would be most productive in alleviating the country's structural imbalances? Which budgetary strategies are sustainable? What major impacts would result from a redirection of expenditures from defense to nondefense? The philosophy underlying this approach stresses the importance of examining defense expenditures in the context of the government's overall development and budgetary strategies.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 01, 1994
- Accession Number
- ADA526131
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School