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The role of macroeconomic policies is very important for the achievement of a stable path in the economy. There are two major groups of policies, fiscal side policies which mainly focus to regulate aggregate demand in the economy and monetary side policies which are mainly responsible to stabilise prices in the economy. But the objectives and measures taken for the achievement of the goals of the two sides are often conflict with each other, so there is a need for coordination between two policies to achieve the set objective. The study focuses on the behaviour of monetary and fiscal policies integration in Pakistan for the time period 1980 to 2011. It finds that there is a weak coordination between monetary and fiscal authorities. We can infer that fiscal policy considerably dominate the monetary policy even State Bank of Pakistan (SBP) is enjoying sufficient amount of independence.

The Coordination of Fiscal and Monetary Policies in Pakistan: An Empirical Analysis 1980–2011