Financial crisis: The incrediable hulk in Indian economic growth and external sector

Bera, Soumitra Kumar (2010): Financial crisis: The incrediable hulk in Indian economic growth and external sector.

Abstract

This paper empirically examines the impact of current world-wide recession on India’s growth. The data for this study were compiled from RBI and Central Statistical Organisation (CSO). The paper has applied regression technique with GDP as dependent variable, while exports, imports, FDI and FII were taken as independent variables. Prior to regression analysis, all the variables are tested for stationarity, applying Augmented Dickey-Fuller (ADF) test. The data sets were also tested for seasonality by applying auxiliary regression. Because of the problem of multicolinearity among the independent variables, three models, dropping one of the highly collinear variables, were estimated. The results suggest that financial crisis has adversely impacted India’s GDP although imports, exports and FDI were found to have exercised stimulating influence through technological spillovers and other externalities. The paper suggests that recovery of global economy is extremely important for Indian economic growth although the effects of global slow down could be minimized through the use of stimulant fiscal and monetary measures.

• Item Type: MPRA Paper
• Language: English
• Keywords: The impact on the world economy; Impact on Indian Economy; Impact on External Sector; Data Sources and Methodology; Regression Analysis: Discussion and Interpretation; Seasonality test; Regression Results and discussion; Conclusions
• Subjects: F - International Economics > F3 - International Finance > F37 - International Finance Forecasting and Simulation: Models and Applications; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; P - Economic Systems > P4 - Other Economic Systems > P45 - International Trade, Finance, Investment, and Aid; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

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