Twin Deficit Challenge: An Evidence from Pakistan Economy

To investigate “Twin Deficit Challenge: An Evidence from Pakistan Economy” this study employed SAM 2010-11 for (Dorosh, Niazi, and Nazli, 2015). This used a static CGE model. The theoretical structure of the core model closely follows Lofgren et al. (2001) model, with an extension to incorporate commonly observed specifications developing country (Naqvi 2011). concludes that lag value budget deficit trade are main factors contributing twin deficit. Two experiments were conducted check effects. on Direct Indirect tax remove internal in economy. explored resources play vital role removing gap. objective experiment was determine possibility implementation direct indirect case analyze its benefits at macro household levels. findings recommend deficits possess threats fiscal policy. Results show policy mix sales tax, income government expenditure help reduce inequality while it reduces financial dependency Therefore, should strive using macroeconomic policies.