Authors: Ms Hina Kanwal MS Student, Department of Commerce, Shah Abdul Latif University, Khairpur Ikhtiar Ali Ghumro, PhD Professor at Institute of Commerce, Shah Abdul Latif University, Khairpur Asad Raza Abidi, PhD Professor Department of Economics, Shah Abdul Latif University, Khairpur Ashiq Ali Lashari Lecturer, Department of Economics, Shah Abdul Latif University, Khairpur
Abstract: The purpose of this research study is to investigate the existence of Armey curve in case of Pakistan. OLS regression model was applied for this purpose. The observed results show that Govt Expenditure, Investment, population growth and unemployment rate positively and significantly affect Pakistan’s economic growth. Whereas, consumption and Trade openness show positive but insignificant impact on economic growth. The main objective of this research was to find out reverse U curve to explain relationship among govt expenditures and economic growth for the period of 1980 to 2015. We found that the optimal size of Pakistani government spending is 18.2 percent but the actual spending is 20.4 percent. Our result suggests that govt expenditure all the way through increase. Therefore, this research recommends the Pakistani govt to decrease its spending up to the maximum level, to achieve efficient utilization of public sector expenditures and promote economic growth.