An Econometric Time-Series analysis of the Dynamic Relationshipamong Trade, Financial Development and Economic Growth in India

Nenavath Sreenu

Abstract


The present research study is conducted to examine the relationship among Financial Development, international trade and economic growth evolution in India. This study has focused on important considerable variables are real GDP, a substitution for economic growth, export services, import services, international trade, gross capital formation and exchange rate as independent variables. Commonly, the nations which trade is more have been seen to have a great progress pathway and great positive impact will be there on economic and financial development. Further the study is to examine if there is any exists a long run affiliation among various financial development, trade growth and other macroeconomic variables development in India for the period 2000 to 2018. In this connection of above para the paper adopted the Johansen co-integration method, KPSS, ADF and PP to establish the survival of a long run affiliation among financial development, economic growth and trade variables and is used to check the sequence of integration of the variables and Johansen co-integration approach is to examine the long run association among selected variables. The way of causality between variable is tested by Granger causality test. It is established that all of the variables are non-stationary and the examination confirm for a long run affiliation among international trade, financial development and economic growth. The outcomes of the research paper signpost that financial development, trade and economic development are co-integrated, but the affiliation is supported by the constancy of the macroeconomic policy subsequently undesirable macroeconomic variables such as escalating inflation can constrain economic growth.

Keywords: Financial, Economic, Trade, co-integration, ADF, KPSS and PP


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