Abstract:
The purpose of this study is to explore the impact of key macroeconomic indicators on the
economic growth of Pakistan. This study will have profound implications for policymakers. To
analyze the impact of macroeconomic indicators on economic growth, economic data has been
collected for a period of 22 years from 2000 to 2021. Data has been analyzed using time-series
regression techniques. The findings of the study indicate the impact of inflation on economic
growth has turned out to be insignificant. One ofthe reasons could be that inflation in Pakistan is
pro-cyclic which can have an indirect effect on the economic growth ofPakistan. However, interest
rates and exchange rates have turned out to be significant. The results provide empirical evidence
of multiple theories including purchasing power parity, quantity money theory, and interest rate
transmission theory. This study will provide valuable insight to economists and policymakers to
keep track of key macroeconomic variables while making policy reforms to boost the economic
growth of Pakistan. Overall, the study recommends that while creating economic policies to
encourage sustainable economic growth, Pakistan's authorities should carefully evaluate the
influence of currency fluctuations on economic growth.
