Causes of fluctuation in the current account balance of Pakistan

Balance of current account has an important role in the economic growth of a country. Pakistan is among those countries who have been suffering from the problem of current account deficit and this problem has become chronic over many decades. This study has been aimed to investigate the factors that cause fluctuation in the current account balance. In this paper, we utilized cointegration and error correction modeling techniques. The empirical results advocate that there exists a significant long term relationship between the current account balance and the balance export, import, total consumption, and workers remittances during the observed period 1972 to 2005.