Economic policy uncertainty and growth nexus in Pakistan: a new evidence using NARDL model

This study aims to test the symmetric and asymmetric impact of economic policy uncertainty (EPU) on growth for time period 2011M1–2020M5 in Pakistan, using linear nonlinear autoregressive distributive lag (ARDL) approach. Unlike other studies, we aim estimate recently developed EPU index by Baker et al. (Q J Econ 131(4):1593–1636, 2016). The (NARDL) model results show that positive shocks have a negative short-run growth, magnitude is greater than shocks. reason Pakistan facing issues like nondiversified sectors, price spikes, political uncertainty, weak financial structure. Due these factors, any adjustment policies creates an unpredictable environment country. When decreases, activity may rebound, but it does not happen instantly. On basis findings study, recommend there should be stability country coordination between macroeconomic achieve long-term goals. Moreover, policymakers must play their part reducing levels envisaging future changes policy-regulatory maintaining flexibility act quickly event major crisis.