R-square = 0.2091 Adj. R-square = 0.1349 F-statistic = 3.8202
The debt sustainability is further analyzed by investigating debt dynamics, through the equation derived from
Bohn (1998). This indicates an unsustainable nature of public debt of Pakistan in short run. The mean
reversion of debt-to-GDP ratio is revealed by the negative sign of the co-efficient of lag debt-to-GDP ratio.
The output gap has a negative sign and is marginally significant. The government spending has negative sign
showing procyclicality of debt dynamics with respect to shock in government spending.