Evidence of Causal Linkages between Merchandize Trade and Economic Growth: The Case of India
Published: 2011
Author(s) Name: Mousumi Bhattacharya
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Abstract
The paper investigates the possible co-integration and
direction of causality, if any, between volume of India’s
merchandize trade and economic growth (GDP) in a Vector
Auto-regressive (VAR) framework during the postliberalization
period (1996-97:Q1– 2008-09:Q3). The
cointegration analysis reveals that long-run relationship
exists among the variables. The tests of Granger causality
reveals that bi-directional causality exists among the
variables volume of merchandize trade and economic
growth.
Keywords : Economic growth, VECM, Cointegration
Analysis
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