Sectoral volatility, development, and governance: A case study of Pakistan

Abstract

Abstrcat Growth stability is an important objective because development requires sustained increases in income, while volatility is costly for the poor and deters growth. This study views the nature of volatility of different economic sectors using the household data, and tries to measure the extent to which volatility in growth rate is associated with the volatility of the sectors under analysis. This study finds that in a country like Pakistan no long-run relation exists between the volatility of growth rate and the sectoral volatility. However, a relationship exists for the short-run. The study suggests that instability in the political structure does not significantly affect of volatility of growth rate.