This study contributes to the literature that highlights the penalties of education-occupation mismatch in terms of earnings across different employment statuses. Most existing literature analyzing the education-occupation mismatch has focused on paid employees, overlooking self-employed individuals, and has not controlled for sample selection bias and unobserved heterogeneity bias simultaneously. Therefore, the objective of this study is to analyze the impact of education mismatch on earnings across different employment statuses after correcting for both sample selection bias and unobserved heterogeneity bias. To achieve this objective, we applied the methodology of Duncan and Hoffman (1981) to the Pakistan Social and Living Standards Measurement (PSLM), 2019-20. Our results show that after controlling for unobserved heterogeneity bias and sample selection bias, overeducation has no positive value for both paid employees and the self-employed. The returns from overeducation based on the OLS model might be overestimated if overeducated workers possess lower average ability levels, whereas the returns of adequately educated individuals increase after correcting for the bias and are significantly higher for self-employed individuals compared to paid employees.
KEYWORDS: Education mismatch, earnings, labor market, sample selection bias, unobserved heterogeneity bias..
JEL: E20, I20.

This study evaluates the effectiveness of monetary policy in controlling inflation in Pakistan. Using quarterly data from 1980 to 2022, the study finds that the policy rate is either an ineffective or counterproductive instrument, while the monetary base serves as an effective tool for controlling inflation. Significant evidence is found against the view that monetary policy is ineffective in controlling inflation in the presence of inflationary cost-push shocks. The study also finds that the effectiveness of monetary policy is asymmetric in combating inflation during inflationary and anti-inflationary oil price shocks. Despite these observations, the study recommends a cautious approach based on additional research involving diverse tools and experimentation with a gradual mixing of instruments.
KEYWORDS: Monetary policy, effectiveness.
JEL: E52, E58.

The study examines the impact of foreign direct investment (FDI) inflows on Pakistan's macroeconomic framework, emphasizing improved capital efficiency and technological advancements. Utilizing a Computable General Equilibrium (CGE) model within the GTAP framework, it evaluates the effects of technology-driven FDI on key sectors, including manufacturing, exports, and demandoriented industries. Key findings indicate that priority sectors such as food and beverages, light manufacturing, and heavy manufacturing experience the highest GDP growth from FDI-induced technological upgrades. Sectors like light manufacturing, metals, textiles, and heavy manufacturing demonstrate significant export increases and reduced reliance on imports. Conversely, demand-oriented sectors such as communication and retail trade drive higher imports. Manufacturing and exportoriented sectors help reduce the trade deficit, while retail trade, communication, and financial services contribute to its increase. The study concludes that attracting FDI to manufacturing and export-driven sectors is crucial. However, foreign investors tend to focus on market-seeking sectors. To encourage efficiency-seeking FDI in productive sectors, the government should enhance the business environment, lower costs, deregulate, and ensure a level playing field.
KEYWORDS: Efficiency-seeking FDI, general equilibrium, market-seeking FDI..
JEL: C32, E31, E43, Q31, Q43.

Productivity growth has remained slow in Asian countries. The study examines the impact of digitalization and innovation on output productivity in four Asian countries: China, India, Bangladesh, and Pakistan, using data from 1990 to 2022. The panel autoregressive distributed lag (ARDL) model was employed to investigate the long-run relationship between the variables. The study implements the Fully Modified OLS (FMOLS) method for robustness checks. The long-run results show that digitalization and innovation have a positive and significant impact on productivity in each country. Human capital, foreign direct investment (FDI), and trade openness also have a significant impact on productivity. The panel ARDL result shows that digitalization, innovation, human capital, trade openness, and FDI significantly affect productivity in the long run. The study recommends encouraging investments in digital infrastructure, inventions, and innovations across various economic sectors, including R&D activities, fostering industry-academia collaborations, and technological advancements. These countries should also invest in education, technical, and vocational training to improve labor productivity and efficiency.
KEYWORDS: Productivity, innovation, digitalization, human capital, FDI, panel ARDL..
JEL: 03, 04, C23, O53.

This study investigates the impact of oil price fluctuations on inflation in Pakistan, focusing specifically on asymmetric effects. Employing the Nonlinear Autoregressive Distributed Lag (NARDL) model, it examines how oil price increases and decreases influence inflation differently. Using secondary annual data from the Pakistan Bureau of Statistics and the State Bank of Pakistan, the study considers the Consumer Price Index (CPI) as the dependent variable, while independent variables include domestic oil prices (LOP), exchange rate (LEXH), interest rate (LINTR), and unemployment rate (LUNEMP). The Augmented Dickey-Fuller (ADF) test assesses stationarity, revealing mixed integration orders (I(0) and I(1)), which justifies the application of the Autoregressive Distributed Lag (ARDL) model to explore both long-run and short-run relationships. The ARDL bounds test confirms the presence of a long-run relationship among the variables. Results indicate that oil prices significantly affect inflation, with past oil prices exhibiting a persistent impact. The NARDL model highlights asymmetry, showing that oil price increases (LOP_POS) exert a stronger positive effect on inflation than decreases (LOP_NEG). Exchange rate fluctuations display mixed effects, with lagged depreciation negatively influencing inflation, while interest rates and unemployment rates do not demonstrate statistically significant longrun effects. Diagnostic tests, including normality, serial correlation (Breusch-Godfrey LM test), and heteroskedasticity (Harvey, White, and Glejser tests), confirm the model's validity. These findings offer key insights for policymakers, underscoring the necessity of targeted interventions in response to oil price shocks. Given the asymmetric effects, monetary authorities should implement differentiated strategies for oil price increases and decreases to manage inflation effectively. Additionally, exchange rate stability plays a crucial role in mitigating inflationary pressures. Future research may expand on this study by incorporating additional macroeconomic variables or employing alternative econometric approaches to enhance inflation modeling in developing economies like Pakistan.
KEYWORDS: Oil prices, Inflation, ARDL model Asymmetric effects, NARDL model, Exchange rate, Interest rate, Unemployment, Pakistan economy, monetary policy..
JEL: 03, 04, C23, O53.