needed help with the assignment topic ( Monetary and Fiscal Policies Coordination in Pakistan )

should explain the Definition of fiscal policy& monetary policies and their coordination , Economic significance of fiscal policy& monetary policies , Relationship betweenfiscal policy& monetary policies , Causes , Size in Pakistan (Data). Solutions to deal , Conclusion.

assignment should explores how the monetary and fiscal policies have coordinated with each other in Pakistan. It argues that monetary and fiscal policies have been executed independently throughout the study period that is 1964-65 to 2008-09 and there have been very few instances of coordination between the two policies while addressing prevailing economic conditions. The paper does not find any difference between the behavior of monetary and fiscal policies before and after the establishment of Monetary and Fiscal Policies Coordination Board in 1994. Whatever instances of coordination were found were clustered in military regimes; which may be one of the reasons of macroeconomic stability in such regimes.

The paper should include the followings:

The existence of coordination between monetary and fiscal policies in Pakistan in addressing macroeconomic imbalances. Contrary to general perception, the paper establishes that monetary policy has been independent of the fiscal policy in Pakistan. Given the independence of the policies, the paper then works out the extent of coordination through movements of policy indicators in different economic scenarios during the period from 1965 to 2009. Four scenarios have been built up, viz. (a) high growth and high inflation, (b) high growth and low inflation, (c) low growth and high inflation and (d) low growth and low inflation. We postulate that monetary and fiscal policies would be coordinating when both are contractionary if scenario (a) prevails, expansionary if scenario (d) prevails and move in opposite directions if scenarios (b) and (c) prevail. With this set up, we have found that during the last 44 years, coordinating behavior of monetary and fiscal policies was observed only in 12 years. Thus in Pakistan, monetary and fiscal policies hardly coordinated each other to address economic issues.

The establishment of Monetary and Fiscal Policies Coordination Board, through amendments in SBP Act in 1994 could not change the behavior of the two institutions. Interestingly, we could not observe even a single instance of coordination during late 1990s.

The coordination between the two policies was relatively high during military regimes compared with democracies that could be another reason for usually echoing better economic performance in such regimes.