In the present study we extend the model presented in Siddiqui and Zaman [The Certainty Case (1989)] in order to include the element of uncertainty. We find total investment higher when the mode of finance is close to Musharka finance. The income distribution pattern is favorable to providers of funds when output (profit) is higher and vise versa. These results have profiund implications for Islamic banking, for they reveal that profits of banks and depositors would be higher during booms at the expense of producers. On the other hand, any shock would be shared by a larger group of economic agents.
This study examines the causality and stability of the relationship between variability in inflation and dispersion in relative prices using monthly price data for twenty industrial groups. ARIMA models have been estimated and the adequacy of the filters has been checked with modified Q-statistic before applying the standard causality tests. Also Hannan and Quinn test has been used to identify the lag length. Results indicate a strong but unstable relationship between the two variables. Granger causality is found to be generally bo-directional.
An analysis of the incidence of provincial and municipal expenditures in Karachi shows that the distribution of their benefitsarea pro-poor, more so in the case of the former. The Expenditure benefit (net of taxes) has also been estimated, the incidence of which is clearly pro-poor in the case of provincial government, while for the municipal government an upper income bias is indicated. Major policy implications emanationg from the analysis relate to allocation of resources between levels of government, enhancing the role of the private sector in pro-rich services, efficient pricing policy with higher cost recovery and cross-subssidisation of services.
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