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Sayyid Tahir*

This paper gives a blue-print of an Islamic economy. It spells out the nature of Islamic
macroeconomics, potential target variables and state of macroeconomic analysis from
the Islamic perspective. In this background, it draws attention to future data
requirements. It points out the need for some disaggregation in the existing National
Income & Expenditure Accounts. It calls for generation of new data sets for distribution,
zakah, wealth, profits and the self-employed. It also brings to fore the urgency of
theoretical work in Islamic macroeconomics.

Islam is a complete code of life. It expects its followers to abide by the Divine Guidance
in the Qur'an and the Sunnah of the Prophet SAAWS at the individual as well as
national levels. At present, no Muslim country can claim to represent the Islamic ideal.
However, all Muslim countries are striving in varying degrees to rediscover this ideal.
One can make a token contribution in this respect by giving a blue-print of an Islamic
economy and by identifying the type of data needed to carry out its economic analysis
at the macro level. By identifying some fresh data possibilities, this effort is likely to
have useful implications for contemporary macroeconomics. This exercise may also
help policy-makers and planners to define a course for Islamization.
This paper has three parts. Section I gives a blue-print of an Islamic economy.
Section II gives broad features of formal macroeconomic analysis for such an
economy. Section III looks at the ensuing data requirements for macroeconomic
analysis from an Islamic perspective.


1.1 The Basic Structure

According to the Islamic world-view, this life is a test. For the purpose of test, Allah
gave man free will and allowed private ownership. This, in turn, implies that people can
own property and exchange property rights. How can millions and millions of economic
agents do so with their free will? Quite obviously through the institution of market. It is,
therefore, safe to conclude that basically an Islamic economy will be a market
economy. This conclusion is also confirmed by scores of Ahadith on forms of
transactions and the evidence available for the first Islamic economy during the days

Professor of Economics, International Institute of Islamic Economics, International Islamic University, Islamabad.
of the Prophet SAAWS and Khulafa-e-Rashideen (the rightly-guided caliphs).
Information about other independent Muslim states during the last fourteen centuries
also confirms that the Ummah has never been in doubt on this subject. The views
about a planned Islamic economy gained currency among some Muslim scholars only
during the colonial days, especially after the now defunct communism won a few
converts in the then Europe.
Notwithstanding its market character, the organized aspect of an Islamic economy
implies that government too will be a part of the scene. As to the nature of the
government's involvement in the economic domain, the following points are
noteworthy. First, as Wal Al-Amr and the Guardian of Islam, it will ensure the
establishment of ‘adl (justice) in the affairs of its subjects. This includes, among other
things, economic justice. The concept of Islamic economic justice will be wider in
scope than the narrow perceptions of equity in the distribution of income and wealth.
For example, it may take the form of penalties on transgressions of an economic
nature. Second, as the custodian of Islamic state, another major function of the
government will be the fulfillment of "critical minimum" or "absolutely essential" needs
of the poor and the destitute. Beyond these two basic functions, its role will be largely
adjudicative. However, the citizens may call upon the government to provide public
goods. But here too it will do the needful without embroiling in the economic life of the
state on permanent basis.

1.2 Key Institutions besides Market & Government

An Islamic economy differs from the capitalist and socialist constructs in respect of its
unique approach to equity. Less fortunate people are given formal rights in the fruits
of economic activity through the institution of zakah. Practically, the government will
maintain separate accounts for this purpose──besides the routine administrative,
welfare and development budgets (Ahmad, 1989).
There may be debt in an Islamic economy. But it will lack the all important credit
feature of a capitalist economy. That is, no liquid cash will change hands on the basis
of rate of interest, as at present. Debt may be created in lieu of trading transactions on
credit or with similar transactions financed by interest-free loans. However, "financial
intermediation" will be on a participatory basis, i.e., through modarabah or
Finally, discipline and balance in a freely working economy will be ensured by
means of the institutions of hisbah and ‘adl. These will provide effective measure for
maintaining a proper distinction between self-interest and "selfishness"──a capitalist
disease──and preventing the latter from eating into the soul of the society.

1.3 Working of The Economy

The institution of market will play a major role in the allocation of resources and
distribution of income.
At the micro level, demand will be influenced by a sense of accountability before
Allah SWT, a desire to avoid extravagance, a wish to care for others and a conscious
effort to avoid doing so’aal (begging others for one's needs). In this background,
relative prices and level of well-being of economic agents will play a major role in
determining the demand for various goods and services in the economy.
On the production and supply side, structure of markets──such as monopoly or
competition──will be less critical. Usual cost considerations will apply. However, the
real difference from a capitalist economy will come from the behavioral hypotheses of
producers. They will strike a balance between their personal goals (i.e., profits) and
interests of the society (e.g., the level of output).
While markets will play a pivotal role in the allocative and distributive matters, the
institution of zakah will ensure that there is a concurrent redistribution of income and
output in favor of the less fortunate at the micro level. Annual redistribution of wealth
and inter-generational redistribution of assets along predetermined lined are other
unique features of an Islamic economy.
At the aggregate level, there will be monitoring of the performance of the economy
in respect of income-earning opportunities, employment and basic needs of the
members of the economy. The role of the government, as mentioned earlier, is
expected to be adjudicative. One expects various institutions of the government, such
as treasury and monetary authority, to work toward the goals of the society in a
coordinated fashion. In matters of development policy, development and distribution
will be getting equal weight.


Will macroeconomic analysis have a place in the scheme of Islamic economics? A

partial "yes" answer has already been given in Section I.3 about the working of an
Islamic economy. Here we (1) comment upon the Islamic approach to
macroeconomics, (2) identify potential target variables, (3) give broad contours of the
subject at present, and (4) offer a few observations on some comparative issues.
However, we begin with a synoptic view of the mainstream macroeconomics and
rationale for Islamic macroeconomics.
2.1 A Synopsis of Traditional Macroeconomics
Conventional macroeconomics aims at both description and prescription at the
aggregate level. Description concerns understanding the existing realities. By and
large, the approach is one of abstraction in order to single out key economic relations
and processes at work. Prescription falls in the domain of economic policy with the aim
of controlling the performance of the economy.
Key aggregates studied are output, income, overall price level, employment and
interest rate.──Sometimes rate of inflation is emphasized instead of the price level.
This list also includes either foreign exchange rate or balance of payments in the case
of an open economy. On the policy side, the emphasis is on stabilization policy. The
ultimate goal of economic policy is full employment without inflation. Distribution issues
are residually addressed via transfer payments for special interest groups.1
Though ultimately models are cast in an aggregate demand-aggregate supply
framework, generally an "as if" approach is followed. That is, the focus is narrowed
with appropriate assumptions, and the argument is built up is a piecemeal fashion.
One comes across full-scale models when all details about an economy are addressed
By and large, analysis remains in a static framework. Dynamic
macroeconomics──with the focus on business cycles and growth──is not at the centre
stage. Although capital accumulation is allowed via saving and investment, yet wealth
does not appear as an endogenous variable in macroeconomic analysis.

2.2 Why Islamic Macroeconomics?

The rationale for Islamic macroeconomics may be traced to the Islamic world-view:
this life is a test. The standard of right and wrong is given in the form of the Ahkam of
Shari’ah in the Qur'an and Sunnah of the Prophet SAAWS. Thus, every action is either
Islamic or un-Islamic. This point provides both the rationale for the Islamic approach
and its broad features in all disciplines in social sciences and humanities, including
As for Islamic macroeconomics, one expects it to cover two broad areas. First, the
study of an Islamic economy per se. What might it be? How might it work? How might
it perform? What policies might be called for to ensure its smooth functioning and to
preserve its Islamic character in an otherwise un-Islamic world? Second, Islamization
of economies orchestrated on un-Islamic lines.

2.3 The Approach of Islamic Macroeconomics

Modeling involves description with an eye on the prescription goal. Any model is
essentially an abstraction from reality──perceived reality in the case of an Islamic
economy. Modeling process may start with the goals of analysis. These goals may be
stated in terms of target variables. There may be some omissions──both in terms of
excluded variables and practical details in real life──in the process of abstraction. The
researcher would make due allowance for such omissions while drawing his

For details, see R. Dornbush and S. Fischer, Macroeconomics, Fourth Edition (New York: McGraw-Hill, 1988), an
intermediate level textbook.
conclusions. Furthermore, since description aims at prescription, policy instruments
may be suitably fitted into the model. Beyond these general considerations, one is
expected to be careful about mathematical requirements for modeling, such as
equality between the number of variables to be explained and the number of equations
at hand, independence and consistency of equations, solvability of the model and
stability of the solution.2 As noted earlier, the parameters for this exercise will come
from the Qur'an and Sunnah and Aathaar-us-Sahabah. Other useful input may be
derived from economic history of the Muslim states during the fourteen centuries.
At present, economies of virtually all Muslim countries are organized along the
capitalist lines. "Islamization" of these economies will also be on the agenda of Islamic
macroeconomics. For this purpose, one may develop models whose special case
would be either the Islamic or the un-Islamic construct. This would help to track the
implications of various policy options for Islamization.

2.4 Potential Target Variables

The key to Islamic macroeconomics lies in the specification of target variables and
economic processes at work. Major variables in traditional macroeconomics were
listed in Section II.1. With the focus on economic activity during a given year, target
variables for an Islamic economy may be divided into three categories: (1) primary
variables or principal aggregates, (2) secondary or link variables which link up decision
making at various levels and affect the level of the primary variables, and (3) any other
variables which depend on the time frame of analysis (short-run versus long-run) or
are related to primary variables [Tahir (1987, p.315)].
Some of the primary variables would be as follows.
i. Aggregate output──the level of economic activity to see where the economy
stands in the global village in any given year.
ii. Aggregate income (the twin of aggregate output in value terms)──potential
purchasing power generated as the result of current economic activity.
iii. Overall price level──indispensable because aggregate output is primarily
defined in value terms but one may be interested in the "real" level of economic
iv. Employment and self-employment to work out the level of unemployment and
dependence in the economy.
v. Poverty and economic disparities among the haves and have-nots.

Uniqueness of solution is an important consideration in solvability.
If one is interested in the determination of aggregate output in a market economy, demand and supply
considerations automatically become important. This also puts the price variable on the centre-stage.
Link variables would depend upon an Islamic economy's likely set-up. For example,
economic agents are expected to address resource shortages either through credit
sales or with the help of financial intermediation based on profit-and-loss sharing. The
former will give rise to spot-price versus credit-price distinction, while the latter would
mean replacement of the existing interest rate variable by a viable Islamic alternative.
Similarly, if one feels the need to continue with the existing macroeconomics tradition
of highlighting the labor market on the supply side, wage rate would also enter the
picture. Foreign exchange rate and balance of trade and payments may be additional
variables in an open economy context.
Among other variables in category 3, wealth and inflation may top the list. The
importance of wealth increases with the need to accommodate zakah in Islamic
macroeconomic models. Inflation becomes important because of its social costs. The
needs for other variables──such as distribution of wealth──may become clear once
the subject progresses. Of course, policy instruments──such as government
expenditure, taxes, monetary aggregates, etc.──need to be envisioned. Finally, if
macroeconomic analysis were carried out with the aim of identifying policies for
Islamizing an otherwise un-Islamic economy, variables like the rate of interest may
also become relevant.

2.5 Whither Islamic Macroeconomics?

So far, all theoretical literature on Islamic macroeconomics focuses on an Islamic

economy. Notable points in this regard are given below, while some details are
deferred until the next section where they are more relevant.
1. Some progress can be claimed in respect of models for a closed economy
excluding financial considerations and supply side constraints [Ahmad
(1987a) and Tahir (1989)].
2. Some literature is available along the lines of traditional IS-LM
models──aggregate demand-side models incorporating goods and financial
markets [Habibi (1987), Hasan (1992), Khan (1986), Khan and Mirakhor
(1987), Mahdi and alAsly (1987), and Sattar (1987)]. In some cases the
interest rate is simply renamed as an average rate of return or an a priori
variable rate of return, while in others just a profit-sharing ratio replaces the
rate of interest.
3. A few full-scale macroeconomic models, without a foreign trade and
payments sector, are also available [Anwar (1987), ElBdour (1987) and
Metwally (1981)]. These models too do not represent a major break from the
conventional thinking.
4. Mirakhor and Zaidi (1987) address some open-economy issues.
Most of the above-mentioned studies are tantamount to redressing traditional
macroeconomic models with some Islamic features. However, a major break from the
traditional macroeconomics is introduction of disaggregation in the aggregate
consumption function [Ahmad (1987a), Metwally (1981) and Tahir (1989)].
Some studies explore major aggregates in an Islamic economy, such as,
aggregate consumption function and aggregate investment function [Ahmad (1987b),
Khan (1984,1992), W.M. Khan (1987), Sattar (1991)]. But these too are on the
theoretical side.
There is a good deal of theoretical and statistical work on Islamic banking. But the
statistical content is in the nature of a report card on the Islamic banking experiment
around the world [Ahmad (1987c)]──not relevant for macroeconomics purposes.

2.6 Comparative Analysis

With the demise of communism, the comparative analysis will be mostly in an Islamic
versus capitalist context. Generally speaking, Islamic and capitalist economies differ
with respect to their orientation and institutional set-ups. Therefore, on the apple
versus orange analogy, normally a direct comparison of their performance will not be
meaningful. Habibi (1987) and Tahir (1989) give examples of a theoretically correct
approach whereby the performance of the two types of economies can be compared
by constraining selected parameters values in the framework of a single model.
There is some empirical work on propositions about certain macroeconomic
aggregates in Islamic and un-Islamic milieus. Darrat (1988) and Zuberi (1992) worked
with the Sudanese and Pakistani data, respectively, on the money demand function.
Both studies, however, suffer from incorrect applications of data for the objectives of
those studies──an issue beyond the scope of this paper.


There is no doubt that Islamic macroeconomics is still a dream. Just a beginning has
been made on the theoretical front during the last few years. The current state of the
art indeed calls for focus on basic research in order to delineate broad contours of the
subject and to work out the agenda for further research. But this does not mean that
efforts on the statistical front be delayed. On the contrary, early data compilation
should substantially reduce the time required to establish Islamic macroeconomics as
a competing paradigm.
Expected data needs can be identified and necessary action initiated by recalling
two things: (1) the agenda of Islamic macroeconomics (Sections II.2 and II.3) and (2)
the focus of analysis or potential target variables (Section II.4). In so far as Islamic
macroeconomics is concerned with determination of aggregate output, income and
employment, most of the existing data compilation practices may continue, of course,
with some changes here and there. But one does expect special data compilation
efforts in order to address Islam's unique emphasis on distribution and interest-free
economy. Some details of the these points are explained under (i) distribution
statistics, (ii) zakah statistics, (iii) output and income statistics, (iv) financial statistics,
(v) manpower statistics, (vi) other statistics for an Islamic economy, and (vii) any other
data to address Islamization issues.

3.1 Distribution Statistics

At present, data are regularly compiled on functional distribution of income (wages,

profits, etc.), taxes and transfer payments. Data on personal distribution of income,
though collected infrequently, aims at tracking inequality in personal income
distribution in the economy. Researchers also process these data to study poverty
using different definitions of the poverty line and various poverty indices. Negligible
attention is paid to distribution of wealth. It is quite significant that there is no relation
between these endeavors behind poverty and income distribution data and standard
macroeconomic analysis.
As mentioned earlier, distribution matters will have a prominent place in Islamic
macroeconomics. In this regard, Tahir (1989) proposes the following formula for
endogenizing distribution issues in the macroeconomic framework──with the focus on
the distribution of aggregate disposable income or purchasing power between the rich
(haves) and the poor (have-nots).
D = [α1 - η1]/√(α1α2)
where α1 and α2, respectively, stand for the proportion of the poor and the rich in the
economy, and η1 is the proportion of aggregate disposable income accruing to the
poor. This is a unit-free index of economic disparity or inequality between the haves
and have-nots. Its value varies between 0 (perfect equality) and √α1÷α2 (perfect
inequality). The ensuing data requirements for the D variable are as follows:
1. Specification of the bench-mark for classifying people as haves or
have-nots──separately for every year. One may use either the cost of
absolutely critical minimum level of living or nisab of zakah, whichever is greater,
for this purpose. A systematic effort along these lines will conform to the state's
Shari’ah responsibilities.
2. Yearly estimates of the proportion of people in the category of have-nots──with
the haves being residually determined.
3. Any other data that may go into defining η1. One would need to define
aggregate disposable income in any given year as well as the quantum of such
income going into the hands of the have-nots. The latter would require a
knowledge of the fraction of personal income (associated with the current
production process) going to this group and their income from other sources,
such as state-sponsored transfer payments and income from wealth owned by
the have-nots.──This last factor, in turn, would necessitate the knowledge of
total wealth in the economy and its distribution among the haves and the

3.2 Zakah Statistics

These statistics will be required partly for distributional considerations, as above, and
partly to meet the religious obligations of the Islamic state. The following data would
be necessary to track zakah flows in the economy.
1. Composition of output produced during a given year along sectoral lines. For
example, agricultural produce (separately for rain-fed and irrigated areas),
mining and rental income from property.
2. Business and industrial inventories of finished goods and intermediate inputs.
3. Separate zakah budget at the governmental level [Ahmad (1989,p.18)]
4. Distribution of zakah according to income-support or economic-rehabilitation
schemes.──While the latter would be a direct addition to disposable income of
the have-nots, only the latter would affect the proportion of income associated
with the current production process going to them.

3.3 Output and Income Statistics

At present, such data are available under National Income & Expenditure Accounts.
The expenditure data are in fact the value of current output of (final, not intermediate)
goods and services at market prices. Here one also comes across distribution of
output by type of use, such as personal consumer expenditure, investment,
government expenditure, exports.──Deduction of the value of imports becomes
necessary if the aforementioned aggregates have some imported components.
Recently emphasis has shifted from "national" product" to "domestic" product.
On the side of the existing income accounts, allowance is made for indirect
business taxes and depreciation charges in order to define national income. This is
followed by calculation of aggregate personal income and total personal disposable
income. With the deduction of savings and other non-personal consumption
expenditures from the disposable income aggregate, one arrive at personal consumer
expenditures in the economy.
So far, all output and income data are on an aggregative basis. Furthermore,
interest income and similar items are involved in the derivation of personal disposable
As for macroeconomic analysis in an Islamic perspective, the following changes
would be necessary:
1. The logical place for introducing (personal) distribution considerations in
macroeconomic models, is the aggregate consumption function [Tahir
(1989,p.97)]. Accordingly, it is in the fitness of things to disaggregate the
existing personal consumer expenditure data along the rich and poor
consumers lines. Similarly disaggregation needs to be introduced on the
income and savings sides in the national accounts.
2. Like income from theft, which is not entered in national statistics, the position of
income from interest and other `haraam sources need to be reviewed.
Apart from these major points, the definition of the aggregate output variable would
need to correspond to the definition of the employment and self-employment
variable(s) in macroeconomic analysis.

3.4 Financial Statistics

In a capitalist economy, as at present, financial intermediation is carried out on the

basis of rate of interest (riba). This dichotomizes the act of credit from that of sale: the
purchaser arranges financing with the capitalist on interest and pays to the seller on
spot. Elimination of riba will mean an end to this dichotomy. The replacement would be
either a participatory financing arrangement between the buyer and a financier (for
cash payment to the seller) or a sale on (zero-interest) credit by the seller to the buyer.
These considerations have far-reaching implications for modeling as well as data
requirements, which have been missed in the existing literature. Here we restrict our
observations to the participatory financing issues, and defer the credit sale matter until
Section III.6.
In Islam participatory financing modes are called modarabah and musharakah. In
both cases the profit-sharing ratio can be independent of a party's financial stake but
the loss-sharing ought to be in proportion to the capital invested. Economic agents
cannot contract on the basis of some rate of profit. Profit-sharing ratio by itself is
meaningless. Therefore, in order to capture the spirit of the Islamic financing, one
needs to highlight both the profits and their sharing. This, in turn, calls for maintenance
of proper data on profits flows, and the shares of entrepreneur-investors and savers
(both poor and rich) for macroeconomic analysis.
Beyond these observations, one must admit that fine details of financial structure
of an Islamic economy are yet to be satisfactorily worked out.──Central banking or
monetary management has received very little attention from Islamic economists.
Khan and Mirakhor (1987) come very close in this regard. Tentatively, one may say
that financial statistics would be needed on assets and liabilities of Islamic financial
institutions and flows that are likely to take place between these institutions and the
monetary authority in the economy.

3.5 Manpower Statistics

At present, the focus of macroeconomic analysis is "employment" or salaried work.
Issues related to self-employment or entrepreneurship are left in the background. In an
Islamic milieu, the profit-&-loss sharing substitute for rate of interest would require that
self-employment variable be highlighted. The existing definition of unemployed──a
person who is looking for a job but not able to land one──may not change. A wholesale
review of the contents of labour force statistics may be desirable to appreciate the
policy options from an Islamic point of view, such as promotion of self-employment
through mo_arabah and musharakah.

3.6 Other Statistics for an Islamic Economy

The need for wealth statistics has already been mentioned in Section III.1. Here one
may add a few observations about the price data.
At present, macroeconomic analysis focuses on the current price level. This price
variable is in fact an aggregative price index defined as a weighted average of selected
prices in the economy. This practice may continue.
As mentioned in Section III.4, after the elimination of riba, there will also be direct
trading between the buyers and sellers on credit, subject the A`hkaam of Shari’ah.
This, in turn, implies that a spot-price versus credit-price distinction will emerge in an
Islamic economy. Thus, one may need to develop statistics on prices for
deferred-payment sales.

3.7 Other Data to Address Islamization Issues

As one may guess, most of the existing data on public debt, interest rate and other
aggregate, especially the financial aggregates, may still be useful for macroeconomic
analysis from an Islamic perspective. However, caution would be necessary on the
choice of models and testing procedures. For example, if the aim is to use the existing
data on monetary aggregates to test interest sensitivity of money demand, one should
also build the existing interest-based money creation process into the model──a point
missed by both Darrat (1988) and Zuberi (1992).
The Islamic tradition in the area of macroeconomics is still in the nascent phase. At this
stage, one can only use a broad brush to identify likely requirements for
macroeconomic analysis from an Islamic perspective.
The need for data also depends on the purpose of study and type of analysis that
one is anticipating. These considerations were deliberately avoided in this study. In
passing, one may mention that in the current phase of Islamic macroeconomics,
emphasis may be on simulations for hypothetical Islamic economies and tests of
hypotheses about various behavioural relations in an Islamic economy. The former
may necssitate additional exogenous information on parameters and pre-determined
variables in the models on hand. The latter, if done in a comparative Islamic versus
un-Islamic perspective, may even require penal data, not addressed in this paper.
Wa-Allaho a`alam.


A select bibliography of the available English literature on Islamic macroeconomics is

as follows.

1. Ahmad, A. (1987a) Income Determination in an Islamic Economy, Research Series

in English, No. 25 (Jeddah: Centre for Research in Islamic Economics, King
Abdul Aziz University).

2. ________ (1987b) "Macro Consumption Function in an Islamic Framework: A

Survey of Current Literature"in A. Ahmad and K.R. Awan (eds.) Lectures on
Islamic Economics (Jeddah: Islamic Development Bank, 1992, pp.245-276).

3. ________ (1987c) Development and Problems of Islamic Banks (Jeddah: Islamic

Development Bank, 1987).

4. Ahmad, Z. (1989) "Public Finance in Islam" IMF Working Paper No. WP/89/68.

5. Anwar, Mohammad (1987) Modelling Interest-free Economy – A Study in

Macroeconomics and Development (Herndon, VA: International Institute of
Islamic Thought).

6. El-Bdour, R. (1987) "Economics of Profit-Sharing Contracts: Conceptual and

Theoretical Issues". Paper presented at INVESTMENT STRATEGY IN
WORKSHOP (18-21 June) organized by The Royal Academy for Islamic
Civilization Research, Jordan and IRTI, IDB (Jeddah) in Amman, Jordon.

7. Darrat, A. (1988) "The Islamic Interest-Free Banking System: Some Empirical

Evidence." Applied Economics, 20, pp. 417-25.
8. Habibi, N. (1987) "The Consequences of Islamic Banking in a Macroeconomic
Framework" in F.R. Faridi (ed.) Essays in Islamic Economic Analysis (New
Delhi: Institute of Objective Studies, 1991, pp. 102-47).

9. Hasan, A. (1992) "Is Equity Financed Budget Deficit Stable in An Interest Free
Economy?" A paper read at The 3rd International Conference on Islamic
Economics (28th-30th January, 1992) held at International Islamic University,
Malaysia. (Typescript)

10. Khan, Mohammad F. (1984) "Macro Consumption in Islamic Framework," Journal

for Research in Islamic Economics, 1(2).

11. ________________ (1992) " A Simple Model of Income Determination, Growth

and Economic Development in the Perspective of An Interest-Free Economy."
A paper read at The 3rd International Conference on Islamic Economics
(28th-30th January, 1992) held at International Islamic University, Malaysia.

12. Khan, M.S. (1986) "Islamic Interest-Free Banking – A Theoretical Analysis," IMF
Staff Papers, 33(1), pp. 1-27.

13. ________ and A. Mirakhor (1987) "The Financial System and Monetary Policy in
an Islamic Economy" in M.S. Khan and A. Mirakhor (eds.) Theoretical Studies
in Islamic Banking and Finance (Houston, TX: The Institute for Research and
Islamic Studies)

14. Khan, W.M. (1987) "Saving and Investment in an Interest-Free Economy" in A.

Ahmad and K.R. Awan (eds.) Lectures on Islamic Economics (Jeddah: Islamic
Development Bank, 1992, pp. 277-88).

15. Mahdi, S. Iqbal and S.M. AlAsly (1987) "A Model of Interest-Free Islamic Economy"
in F.R. Faridi (ed.) Essays in Islamic Economic Analysis (New Delhi: Institute of
Objective Studies, 1991, pp. 52-66).

16. Metwally, Muhammad M. (1981) Macroeconomic Models of Islamic Doctrines

(London: J.K. Publishers).

17. Mirakhor, A. and Zaidi, I (1987) "Stabilization and Growth in an Open, Islamic
Economy" in A. Ahmad and K.R. Awan (eds.) Lectures on Islamic Economics
(Jeddah: Islamic Development Bank, 1992, pp. 395-417).

18. Sattar, Z. (1987) "Interest-Free Banking, Profit-Sharing and the Islamic

Macroeconomic System" in F.R. Faridi (ed.) Essays in Islamic Economic
Analysis (New Delhi: Institute of Objective Studies, 1991, pp. 82-101).

19. ________ (1991) "A Dynamic Investment Model with Profit-Sharing in an

Interest-Free Economy: Methodological Issues," The American Journal of
Islamic Social Sciences, 8(1), pp. 109-28.

20. Tahir, S. (1987) "A Contribution to the Theory of Determination of Aggregate

Output, Income and Economic Inequalities in an Islamic Economy" in A. Ahmad
and K.R. Awan (eds.) Lectures on Islamic Economics (Jeddah: Islamic
Development Bank, 1992, pp. 289-320)
21. _______ (1989) "Toward a Theory of Aggregate Output, Income and Economic
Inequalities Determination in an Islamic Economy," Journal of Islamic
Economics, 2(2), pp. 95-108.

22. Zuberi, H.A. (1992) "Interest-Free Banking and Economic Stability," Pakistan
Development Review, 31(4, Part II), pp. 1077-87.