Economists agree that both monetary and fiscal policies can influence the pace of aggregate economic activity. However, their relative importance still remains a widely debated and complicated issue. Given the mushroom growth of different types of economic models, it seems almost impossible to decide their relative importance, at a purely theoretical level. So in this paper, we have tried to deal with this issue empirically in the context of Pakistan. In surveying the literature, we can find a number of empirical studies on this issue, but most of them are for the developed countries. Similar studies for the developing countries are rare. We have been able to find only two such studies for Pakistan, one by Hussain (1982) and the other by Masood and Ahmad (1980). The study by Hussain (1982) covers the period from 1949-50 to 1970-71, and the data used in this study pertain to united (East and West) Pakistan. So the results of his study can hardly be of much relevance to present Pakistan. Masood and Ahmad (1980) use data for present Pakistan from 1959-60 to 1976-77 in their study. They regress induced’ expenditures on autonomous expenditures and money supply and assess the relative importance of the two exogeneous variables, on the basis of t-values and beta-coefficients. Their definition of induced and autonomous expenditures seems to be a little arbitrary. Agricultural income, an independent variable in their regressions, turns out to be a dominant variable in a number of equations. The negative sign of the autonomous expenditures in some regressions is difficult to justify. Their efforts, to determine the lag structure, have also been unsuccessful. Although their data are from many individual sources, they have not applied any formal tests to check the consistency of the data and the possible structural change that might have taken place due to the separation of East Pakistan.