Monetary Policy and Employment Generattion in Pakistan

The objective of this research paper was to investigate the long run and short run relationship between monetary policy and employment generation in Pakistan. We used time series data for the period of 1990- 2017. Employment generation was taken as dependent variable while gross domestic product (GDP), money supply, inflation, unemployment rate and exchange rate were taken as independent variables. We applied statistical techniques such as ADF test, Bound test, ARDL Model and ECM to check stationarity and long run as well as short run relationship between variables. The results show that exchange rate has positive association with GDP in the long run but negative relation in the short run. Money supply has negative relation with GDP in the long and short run. Inflation has negative relation with GDP both in short and long run. Unemployment has negative relation with GDP in long run but positive relation with GDP in short run.