How does Financial Development and Petroleum Price cause Trade Openness in Pakistan?
Abstract
In the past, financial development and petroleum prices were identified as crucial factors influencing economic growth. This induced the researcher to explore how financial development and petroleum prices influence trade openness in Pakistan. The yearly data is collected for the period 1980-2016 to apply the ARDL co integration method. The results reflected the presence of long-term co-integration between trade openness and its various factors. This suggests that with the rise in the availability of credit in the private sector there is an eventual impact on imports and exports. Moreover, international petroleum prices also impact the same by pushing up the prices of goods. Hence,it is recommended that hedging the oil prices and the expansion of credit in Pakistan is worthwhile in terms of trade openness.
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