Working Paper 07
Dr. Naafey Sardar
This paper aims to investigate the economic implications of Pakistan’s placement on the Financial Action Task Force’s (FATF) grey list. Following the approach set forth by Abadie and Gardeazabal (2003), the synthetic control method is used to understand how Pakistan’s economy would have evolved in the absence of FATF interventions. Results suggest that FATF grey-listing, starting in 2008 and till 2019, may have resulted in cumulative real GDP losses of approximately USD 38 billion. Moreover, estimates indicate that a large proportion of this response (≈58 percent) was driven by reduction in consumption expenditures (both household and government). Exports and inward foreign direct investment are also partially responsible for this decline in GDP, with associated cumulative losses of USD 4.5 billion and USD 3.6 billion respectively. These results point to the significant negative consequences associated with FATF grey-listing.
You can read the complete Working Paper 07 here.
Dr. Naafey Sardar is an economist interested in Macro and Energy Economics. His ongoing projects study the impact of energy price shocks (large movements in oil and gasoline prices) on the U.S. economy. Dr. Naafey completed his Ph.D. in Economics from Kansas State University in August 2020 under the supervision of Lance Bachmeier, and he is currently working as a senior research associate and adjunct professor at Texas A&M University in San Antonio.