Ahsan-ul Haq Satti

Dear Dr. Zaman sahib,

I am extremely sorry for a much delayed response. I was very busy with PC work and teaching at LUMS. I have read the proposal and have the following comments. Hope these will help.

1. Page 3 - Objectives: I believe all three objectives are very interesting and significantly important.

2. Page 11: Theoretical framework:

3.. Is there any study for Pakistan looking at the validity of Keynesian and classical models. Mr. Irfan Qureshi has done (and is currently extending) some work on these issues. It may be important to look at these results and initial findings. If only one model is valid then you can focus on the valid model.

4.. What are the modifications you Ahsan has brought-in CL(2005). These changes and modifications need to spelled out.

5. I do not understand the basis of equation 6 on page 12. Cite any reference or explain in a few words.

6. Equations 11-13 is interesting stuff (page 13). However, it is not clear how these equations are related to the research question posed or testable hypotheses stated earlier.

7. What is monetary reaction function on page 13.

8. MOST IMPORTANTLY: The main focus of this thesis is to output gap and issues related to measurement errors in GDP (see page 3 and 4). On page 14, it is stated that GDP data will be constructed. It does not make any sense to me that student explores an important question on data measurement by constructing data based on loosely defined assumptions. How can these findings be justified.

9. The is no mention of other variables and sources on page 14.

10. A number of current citations (on Pakistan) have no references.

11. I think, the lit review is weak. There has been some work already in progress in SBP (Hamza Malik). It may be important to have a closer look at existing literature.

Please feel free to send me a revised version and I will be happy to comment.

Best regards.

Ahmed

Ahmed M. Khalid, Ph.D. (Johns Hopkins)

Professor of Economics and Finance

Co-Director, Globalisation and Development Centre

Bond University, Australia