Open Market Operation by State Bank of Pakistan and Its Impact on Economic Stability

The objective of this research paper was to assess the impact of Open Market Operation (OMO) conducted by State Bank of Pakistan on economic stability during the period of 1998-2018. For this purpose, the data was collected from different sources. Gross Domestic Product (GDP) was taken as a dependent variable while Money Supply, Inflation, Unemployment, Interest rate and Quantity of Money were taken as independent variables. Different statistical techniques like Correlation Analysis Multiple Regression and ADF-Test were used to analyze the data. We found that Money Supply, inflation, unemployment, interest rate have significant impact on Gross Domestic Product (GDP). Therefore, measures should be taken to control quantity of money in order to decrease inflation, unemployment and interest rate.