Estimation of Repo Rates of Pakistan from 1992 to 202

Year Y (Repo-rate) X1 (Nominal GDP) X2 (Broad Money) X3 (Inflation) X4 ( T-bills rate)

1992 15 1366000 583894 9.52 21
1993 17 1476000 649249 9.97 12.5
1994 15 1629000 771871 12.37 6.5
1995 17 1801000 865797 12.34 0.5
1996 20 1966000 976157 10.37 3
1997 18 2139000 1170525 11.38 9
1998 16.5 2287000 1262521 6.23 11.87
1999 13 2434000 1316989 4.14 10.09
2000 13 5147095 1476675 4.37 10.95
2001 10 5655818 1650125.682267 3.15 7.92
2002 7.5 6030117 1913415.12061 3.29 4.32
2003 9.5 6581623 2266163.207795 2.91 1.644
2004 10 7611678 2731049.17744 7.44 0
2005 9 8619232 3201870.006187 9.06 8.25
2006 9.5 9689071 3679033.18936326 7.92 8.81
2007 10 11165234 4406845.50730329 7.6 9.26
2008 15 12647137 4791898.54065398 20.29 13.1
2009 12.5 14705698 5476872.76122456 13.65 12.1
2010 14 16507053 6295663.43553797 12.94 13.41
2011 13.5 19731030 7074569.89459546 11.92 0
2012 9.5 22344639 8254209.78467469 9.68 9.28
2013 10 25042169 9384151.60560475 7.69 9.98
2014 9.5 27952815 10409436.1519825 7.19 9.47
2015 6.5 30425880 11761875.570365 2.53 6.36
2016 6.25 32725049 13470709.8568564 3.77 5.1
2017 13 35552819 14917262.8392847 4.09 6.01
2018 10.5 39189810 16574425.5980877 5.08 10.34
2019 13.75 43798401 18715780.8833133 10.58 13.29
2020 8 47540409 22070725.0475934 9.74 7.19
2021 10.75 55836225 25345029.4130742 9.5 11.32
2022 17 66623564 27942837.9832428 19.87 17.5
2023 23 84657809 31524126.5464036 31.4 21.99
from 1992 to 2023
X5 (Exchange rate) Y (Estimated Repo-rate) Error term
25.76 15.33 -0.33
30.20 14.71 2.29
30.88 15.46 -0.46
34.34 14.82 2.18
40.22 13.95 6.05
44.16 15.15 2.85
46.12 12.53 3.97
51.76 11.14 1.86
57.99 10.82 2.18
60.10 9.77 0.23
58.37 9.51 -2.01
57.44 9.04 0.46
59.45 11.36 -1.36
59.78 13.06 -4.06
60.89 12.42 -2.92
61.52 12.23 -2.23
78.97 19.53 -4.53
84.14 15.48 -2.98
85.66 15.12 -1.12
89.85 12.77 0.73
97.11 12.29 -2.79
105.59 11.05 -1.05
100.43 10.49 -0.99
104.70 7.50 -1.00
104.69 8.20 -1.95
110.30 8.38 4.62
138.65 9.10 1.40
154.81 12.23 1.52
159.77 11.55 -3.55
176.54 11.20 -0.45
226.30 16.12 0.88
287.88 20.29 2.71
Year Y (Repo-rate) Growth rate X3 (Inflation)
1992 15 14.13 9.52 Relation between Repo-rate
1993 17 14.20 9.97
1994 15 14.30 12.37
flation
1995 17 14.40 12.34 35
1996 20 14.49 10.37
30
1997 18 14.58 11.38
1998 16.5 14.64 6.23 25
1999 13 14.71 4.14 20
2000 13 15.45 4.37 15
2001 10 15.55 3.15 10
2002 7.5 15.61 3.29
5
2003 9.5 15.70 2.91
2004 10 15.85 7.44
0
2005 9 15.97 9.06 9 92 994 996 998 000 002 004 006 008
2006 9.5 16.09 7.92
1 1 1 1 2 2 2 2 2 2
2007 10 16.23 7.6
Y (Repo-rate) Growth r
2008 15 16.35 20.29
2009 12.5 16.50 13.65
2010 14 16.62 12.94
2011 13.5 16.80 11.92
2012 9.5 16.92 9.68
2013 10 17.04 7.69
2014 9.5 17.15 7.19
2015 6.5 17.23 2.53
2016 6.25 17.30 3.77
2017 13 17.39 4.09
2018 10.5 17.48 5.08
2019 13.75 17.60 10.58
2020 8 17.68 9.74
2021 10.75 17.84 9.5
2022 17 18.01 19.87
2023 23 18.25 31.4
tween Repo-rate growth rate and In-
flation

0 02 004 006 008 010 012 014 016 018 020 022
0
2 2 2 2 2 2 2 2 2 2 2
rate) Growth rate X3 (Inflation)
year Y (Repo-rate) X1 (Nominal GDP) X2 (Inflation) Estimated Repo-rate
1992 15 1366000 9.52 13.85
1993 17 1476000 9.97 14.10
1994 15 1629000 12.37 15.47
1995 17 1801000 12.34 15.44
1996 20 1966000 10.37 14.30
1997 18 2139000 11.38 14.87
1998 16.5 2287000 6.23 11.90
1999 13 2434000 4.14 10.69
2000 13 5147095 4.37 10.65
2001 10 5655818 3.15 9.92
2002 7.5 6030117 3.29 9.98
2003 9.5 6581623 2.91 9.72
2004 10 7611678 7.44 12.26
2005 9 8619232 9.06 13.12
2006 9.5 9689071 7.92 12.40
2007 10 11165234 7.6 12.12
2008 15 12647137 20.29 19.30
2009 12.5 14705698 13.65 15.36
2010 14 16507053 12.94 14.84
2011 13.5 19731030 11.92 14.05
2012 9.5 22344639 9.68 12.60
2013 10 25042169 7.69 11.28
2014 9.5 27952815 7.19 10.81
2015 6.5 30425880 2.53 7.98
2016 6.25 32725049 3.77 8.54
2017 13 35552819 4.09 8.55
2018 10.5 39189810 5.08 8.88
2019 13.75 43798401 10.58 11.74
2020 8 47540409 9.74 11.02
2021 10.75 55836225 9.5 10.35
2022 17 66623564 19.87 15.61
2023 23 84657809 31.4 21.07

Intrepretation of the Betas:

X1 = Nominal GDP
Theory:
According to theory the Repo rates are inversely related to the Nominal GDP because Higher repo r
makes it expensive for banks to borrow money from Central bank as a result, they can't lend money
businesses and individuals, reducing investment and overall GDP growth rate.
According to estimated Equation:
according to estimated equation the Repo rates are negatively related which is as per the theory
B1 suggests that Increase in 1 unit in the Repo rate reduces the Nominal GDP by 0.0000000640 units
X3 = Inflation
Theory:
The inflation rate is negatively related to the repo rates
According to estimated equation:
As per the estimated equation Repo rate seems positively related to the Inflation
B3 suggests that Increase in Repo rate by 1 unit increase inflation by 0.573602 units.

level of significance of variables:

X3 = Inflation
Theory:
The inflation rate is negatively related to the repo rates
According to estimated equation:
As per the estimated equation Repo rate seems positively related to the Inflation
B3 suggests that Increase in Repo rate by 1 unit increase inflation by 0.573602 units.

level of significance of variables:

Since the p-value of each variable (X1 = 0.0219, X2 = 0.00) is less than 0.05 we can say that variables
significant at 5%
 error term Dependent Variable: Y
1.15 Method: Least Squares
2.90 Date: 11/03/23 Time: 09:23
Sample: 1992 2023
-0.47 Included observations: 32
1.56
5.70 Variable Coefficient Std. Error t-Statistic Prob.
3.13 C 8.475500 0.924713 9.165551 0.0000
4.60 X1 -6.40E-08 2.64E-08 -2.422710 0.0219
2.31 X2 0.573602 0.094136 6.093343 0.0000
2.35 R-squared 0.563562 Mean dependent var 12.58594
0.08 Adjusted R-squared 0.533463 S.D. dependent var 4.008866
-2.48 S.E. of regression 2.738195 Akaike info criterion 4.941535
Sum squared resid 217.4337 Schwarz criterion 5.078948
-0.22 Log likelihood -76.06456 Hannan-Quinn criter. 4.987084
-2.26 F-statistic 18.72354 Durbin-Watson stat 0.871870
-4.12 Prob(F-statistic) 0.000006
-2.90
Regression Equation:
-2.12
-4.30
Y = C + B1X1 + B2X2
-2.86 Y = C + B1(Nominal GDP) + B2(Inflation)
-0.84 Y = 8.475500+ 0.0000000640(Nominal GDP) +0.573602(Inflation)
-0.55
-3.10 Actual & Estimated Repo-rates
-1.28
-1.31 25
-1.48 20
-2.29
15
4.45
1.62 10
2.01 5
-3.02
0.40 0
1990 1995 2000 2005 2010 2015 2020 2025
1.39
1.93 Y (Repo-rate) Y (Estimated Repo-rate)

DP because Higher repo rates

lt, they can't lend money to
ate.

h is as per the theory

DP by 0.0000000640 units

ation
02 units.
ation
02 units.

we can say that variables are

n)

0 2025
year Y (Repo-rate) Y (Estimated Repo-rate) Error term
1992 15 15.33 -0.33 Actual & Estima
1993 17 14.71 2.29
1994 15 15.46 -0.46 25
1995 17 14.82 2.18 20
1996 20 13.95 6.05
1997 18 15.15 2.85 15
1998 16.5 12.53 3.97 10
1999 13 11.14 1.86 5
2000 13 10.82 2.18
2001 10 9.77 0.23 0
1990 1995 2000 2005
2002 7.5 9.51 -2.01
2003 9.5 9.04 0.46 Y (Repo-ra
2004 10 11.36 -1.36
Y (Estimate
2005 9 13.06 -4.06
2006 9.5 12.42 -2.92
2007 10 12.23 -2.23
2008 15 19.53 -4.53
2009 12.5 15.48 -2.98
2010 14 15.12 -1.12
2011 13.5 12.77 0.73
2012 9.5 12.29 -2.79
2013 10 11.05 -1.05
2014 9.5 10.49 -0.99
2015 6.5 7.50 -1.00
2016 6.25 8.20 -1.95
2017 13 8.38 4.62
2018 10.5 9.10 1.40
2019 13.75 12.23 1.52
2020 8 11.55 -3.55
2021 10.75 11.20 -0.45
2022 17 16.12 0.88
2023 23 20.29 2.71
 Actual & Estimated Repo-rates

0 1995 2000 2005 2010 2015 2020 2025

Y (Repo-rate)
Y (Estimated Repo-rate)
Year Y (Repo-rate) Growth in M2 X4 ( T-bills rate)
1992 15 13.28 21 Repo-rate, M2 & T-b
1993 17 13.38 12.5
1994 15 13.56 6.5 25
1995 17 13.67 0.5
20
1996 20 13.79 3
1997 18 13.97 9 15
1998 16.5 14.05 11.87
1999 13 14.09 10.09
10
2000 13 14.21 10.95 5
2001 10 14.32 7.92
2002 7.5 14.46 4.32 0
2003 9.5 14.63 1.644 9 92 994 996 998 000 002 004 006 008 010
2004 10 14.82 0 1 1 1 1 2 2 2 2 2 2
2005 9 14.98 8.25
Y (Repo-rate) Growth in M
2006 9.5 15.12 8.81
2007 10 15.30 9.26
2008 15 15.38 13.1
2009 12.5 15.52 12.1
2010 14 15.66 13.41
2011 13.5 15.77 0
2012 9.5 15.93 9.28
2013 10 16.05 9.98
2014 9.5 16.16 9.47
2015 6.5 16.28 6.36
2016 6.25 16.42 5.1
2017 13 16.52 6.01
2018 10.5 16.62 10.34
2019 13.75 16.74 13.29
2020 8 16.91 7.19
2021 10.75 17.05 11.32
2022 17 17.15 17.5
2023 23 17.27 21.99
o-rate, M2 & T-bills rate

2 4 6 8 0 2 4 6 8 0 2
00 200 200 200 201 201 201 201 201 202 202

Growth in M2 X4 ( T-bills rate)

Year Y (Repo-rate) X5 (Exchange rate)
1992 15 25.7643 Repo-rate, Exchange-rate
1993 17 30.1953
1994 15 30.877 300
1995 17 34.3357
1996 20 40.2203 200
1997 18 44.1602
1998 16.5 46.115
100
1999 13 51.75984
2000 13 57.986277
0
2001 10 60.097437
2002 7.5 58.372442 9 92 994 996 998 000 002 004 006 008 010 012 014 0
1 1 1 1 2 2 2 2 2 2 2 2 2
2003 9.5 57.439062
2004 10 59.448524 Y (Repo-rate) X5 (Exchange r
2005 9 59.777036
2006 9.5 60.885543
2007 10 61.521018
2008 15 78.969167
2009 12.5 84.1448611111111
2010 14 85.6601428571429
2011 13.5 89.8489393939394
2012 9.5 97.1119117647059
2013 10 105.5925
2014 9.5 100.42696969697
2015 6.5 104.702333333333
2016 6.25 104.692666666667
2017 13 110.300689655172
2018 10.5 138.65
2019 13.75 154.8086667
2020 8 159.770344827586
2021 10.75 176.53724137931
2022 17 226.3
2023 23 287.884827586207
, Exchange-rate

6 8 0 2 4 6 8 0 2
00 200 201 201 201 201 201 202 202

X5 (Exchange rate)
Year Y (Repo-rate) X1 (Nominal GDP) X2 (Broad Money) X3 (Inflation)
1992 15 1366000 583894 9.52
1993 17 1476000 649249 9.97
1994 15 1629000 771871 12.37
1995 17 1801000 865797 12.34
1996 20 1966000 976157 10.37
1997 18 2139000 1170525 11.38
1998 16.5 2287000 1262521 6.23
1999 13 2434000 1316989 4.14
2000 13 5147095 1476675 4.37
2001 10 5655818 1650125.682267 3.15
2002 7.5 6030117 1913415.12061 3.29
2003 9.5 6581623 2266163.207795 2.91
2004 10 7611678 2731049.17744 7.44
2005 9 8619232 3201870.006187 9.06
2006 9.5 9689071 3679033.18936326 7.92
2007 10 11165234 4406845.50730329 7.6
2008 15 12647137 4791898.54065398 20.29
2009 12.5 14705698 5476872.76122456 13.65
2010 14 16507053 6295663.43553797 12.94
2011 13.5 19731030 7074569.89459546 11.92
2012 9.5 22344639 8254209.78467469 9.68
2013 10 25042169 9384151.60560475 7.69
2014 9.5 27952815 10409436.1519825 7.19
2015 6.5 30425880 11761875.570365 2.53
2016 6.25 32725049 13470709.8568564 3.77
2017 13 35552819 14917262.8392847 4.09
2018 10.5 39189810 16574425.5980877 5.08
2019 13.75 43798401 18715780.8833133 10.58
2020 8 47540409 22070725.0475934 9.74
2021 10.75 55836225 25345029.4130742 9.5
2022 17 66623564 27942837.9832428 19.87
2023 23 84657809 31524126.5464036 31.4
X4 ( T-bills rate) X5 (Exchange rate) Y (Estimated Repo-rate) Error term Dependent Variable: Y
Method: Least Squares
21 25.7643 15.3302291765 -0.3302291765 Date: 11/03/23 Time: 22:28
12.5 30.1953 14.7076080815 2.2923919185 Sample: 1 32
6.5 30.877 15.460801771 -0.460801771 Included observations: 32
0.5 34.3357 14.8217488095 2.1782511905 Variable Coefficient
3 40.2203 13.9497769845 6.0502230155
9 44.1602 15.145242565 2.854757435 C 8.019159
X1 -2.14E-07
11.87 46.115 12.532163501 3.967836499 X2 3.66E-07
10.09 51.75984 11.143783974 1.856216026 X3 0.562803
10.95 57.986277 10.815532575875 2.1844674241 X4 0.101200
X5 -0.003625
7.92 60.097437 9.76924018858472 0.2307598114
4.32 58.372442 9.50622966389326 -2.0062296639 R-squared 0.583359
1.644 57.439062 9.03602034230297 0.4639796577 Adjusted R-squared 0.503236
S.E. of regression 2.825507
0 59.448524 11.361577327443 -1.3615773274
Sum squared resid 207.5708
8.25 59.777036 13.0637311987644 -4.0637311988 Log likelihood -75.32182
8.81 60.885543 12.420485619932 -2.9204856199 F-statistic 7.280783
Prob(F-statistic) 0.000222
9.26 61.521018 12.234105489423 -2.2341054894
13.1 78.969167 19.5252361875044 -4.5252361875
Regression Equation:
12.1 84.1448611111111 15.4784308870804 -2.9784308871
Y = C + B1X1 + B2X2 + B
13.41 85.6601428571429 15.1201072775498 -1.1201072775
Y = C + B1(Nominal GDP)
0 89.8489393939394 12.7689205161189 0.7310794839
B4(T-bills) + B5(Exchange
9.28 97.1119117647059 12.2934853950439 -2.793485395
Y = 8.019159 -0.000000214
9.98 105.5925 11.0498925791513 -1.0498925792
0.000000366(M2) + 0.56280
9.47 100.42696969697 10.4879800264741 -0.9879800265
0.003625(Exchange rate)
6.36 104.702333333333 7.50084477042025 -1.0008447704
5.1 104.692666666667 8.20465471494276 -1.9546547149
6.01 110.300689655172 8.38081020317821 4.6191897968
10.34 138.65 9.10162041890009 1.3983795811
13.29 154.8086667 12.2344993125052 1.5155006875
7.19 159.770344827586 11.5535585614192 -3.5535585614
11.32 176.53724137931 11.1987526151852 -0.4487526152
17.5 226.3 16.1223531158669 0.8776468841
21.99 287.884827586207 20.2940378899837 2.70596211
t Variable: Y
ast Squares
3/23 Time: 22:28
32
bservations: 32

riable Coefficient Std. Error t-Statistic Prob.

C 8.019159 2.127476 3.769331 0.0009

X1 -2.14E-07 3.35E-07 -0.637952 0.5291
X2 3.66E-07 5.73E-07 0.638468 0.5288
X3 0.562803 0.121051 4.649309 0.0001
X4 0.101200 0.116099 0.871673 0.3914
X5 -0.003625 0.064600 -0.056110 0.9557

0.583359 Mean dependent var 12.58594

-squared 0.503236 S.D. dependent var 4.008866
ession 2.825507 Akaike info criterion 5.082614
red resid 207.5708 Schwarz criterion 5.357439
ood -75.32182 Hannan-Quinn criter. 5.173711
7.280783 Durbin-Watson stat 0.986079
tistic) 0.000222

sion Equation:
+ B1X1 + B2X2 + B3X3 + B4X4
+ B1(Nominal GDP) + B2(M2) + B3(Inflation) +
ills) + B5(Exchange rates)
019159 -0.000000214(Nominal GDP) +
00366(M2) + 0.562803(Inflation)+0.101200(T-bills)-
25(Exchange rate)
Intrepretation of the Betas:
X1 = Nominal GDP
Theory:
According to theory the Repo rates are inversely related to the Nominal GDP because
Higher repo rates makes it expensive for banks to borrow money from Central bank as a
result, they can't lend money to businesses and individuals, reducing investment and
overall GDP growth rate.
According to estimated Equation:
according to estimated equation the Repo rates are negatively related which is as per the
theory
B1 suggests that Increase in 1 unit in the Repo rate reduces the Nominal GDP by
0.000000214 units

X2 = Broad Money
Theory:
Relation between M2 and Repo-rate is complex and can depend on the specific economic
conditions
According estimated equation:
As per the estimated equation the Repo rates seems to positively related to the M2
B2 suggests that Increase in Repo rate by 1 unit increase the M2 by 0.000000366

X3 = Inflation
Theory:
The inflation rate is negatively related to the repo rates
According to estimated equation:
As per the estimated equation Repo rate seems positively related to the Inflation
B3 suggests that Increase in Repo rate by 1 unit increase inflation by 0.562803 units.

X4 = T-bills
Theory:
T-bills is positively related to repo rates because T-bills are short-term govt securities
which affect Repo-rates; when repo-rate is high it becomes more expensive for bans to
borrow money from central bank making T-bills more attractive increasing the T-bills
demand.
According to estimated equation:
As per the equation Repo rates are positively relative with rate T-bills
B4 suggests that increase in Repo-rate by 1 unit the T-bills rate increases by 0.101200

X5 = Exchange rate
Theory:
The Repo rates are negatively related to the exchange rate meaning when the Repo rate
increases, the Exchange tends to appreciate and vice versa.
According to the estimated equation:
As per the equation Repo rates are negatively related to Exchange rates which is true.
B5 suggests that Increase in Repo rates by 1 unit decreases the exchange by 0.003625.
level of significance of variables:
The Repo rates are negatively related to the exchange rate meaning when the Repo rate
increases, the Exchange tends to appreciate and vice versa.
According to the estimated equation:
As per the equation Repo rates are negatively related to Exchange rates which is true.
B5 suggests that Increase in Repo rates by 1 unit decreases the exchange by 0.003625.
level of significance of variables:
Except variable X3 (Inflation) p-value = 0.0001 every variable is insignificant because there
p-vale is greater than 0.05.
 l GDP because
Central bank as a
vestment and

which is as per the

al GDP by

specific economic

d to the M2
00000366

Inflation
562803 units.

govt securities
sive for bans to
asing the T-bills

es by 0.101200

en the Repo rate

s which is true.
e by 0.003625.
en the Repo rate

s which is true.
e by 0.003625.

ificant because there

Year Y (Repo-rate) Y (Estimated Repo-rate) Error term
1992 15 15.33 -0.33 Actual & Estimated
1993 17 14.71 2.29
1994 15 15.46 -0.46 25
1995 17 14.82 2.18
1996 20 13.95 6.05 20
1997 18 15.15 2.85
1998 16.5 12.53 3.97 15
1999 13 11.14 1.86
2000 13 10.82 2.18 10
2001 10 9.77 0.23
2002 7.5 9.51 -2.01
5
2003 9.5 9.04 0.46
2004 10 11.36 -1.36
0
1990 1995 2000 2005 201
2005 9 13.06 -4.06
2006 9.5 12.42 -2.92 Y (Repo-rate) Y (Esti
2007 10 12.23 -2.23
2008 15 19.53 -4.53
2009 12.5 15.48 -2.98
2010 14 15.12 -1.12
2011 13.5 12.77 0.73
2012 9.5 12.29 -2.79
2013 10 11.05 -1.05
2014 9.5 10.49 -0.99
2015 6.5 7.50 -1.00
2016 6.25 8.20 -1.95
2017 13 8.38 4.62
2018 10.5 9.10 1.40
2019 13.75 12.23 1.52
2020 8 11.55 -3.55
2021 10.75 11.20 -0.45
2022 17 16.12 0.88
2023 23 20.29 2.71
 Actual & Estimated Repo-rates

5 2000 2005 2010 2015 2020 2025

Y (Repo-rate) Y (Estimated Repo-rate)