Department of Economics and Finance

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End date: 2019Subject: search.filters.subject.Economic Growth

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Now showing 1 - 10 of 27
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    Public debt and economic growth in India: A reassessment
    (Elsevier, 2014-08) Bal, Debi Prasad
    This paper examines the effect of public debt on economic growth in India between 1980 and 2011. Using the autoregressive distributed lag ARDL model, the paper traces a long-run equilibrium relationship between public debt and economic growth. The error correction model (ECM) results show that central government debt, total factor productivity (TFP) growth, and debt-services are affecting the economic growth in the short-run, and that the results are consistent with our a priori expectation. It is recommended that the government should follow the objective of inter-generational equity in fiscal management over the long term in order to stabilize debt-GDP ratio, particularly, after the global financial crisis.
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    Nexus between defense expenditure and economic growth in BRIC economies: An empirical investigation
    (MPRA, 2016) Bal, Debi Prasad
    This paper considers the defense expenditure and economic growth nexus based on the cross-border problems and increasing geo-political presence for BRIC blocs over the period 1993-2014. Our approach is more methodological in terms of employing Panel cointegration and causality to highlight the fundamental relation between the defense expenditure and economic growth. Here we emphasize various economic considerations in terms of pre and post war, strategic and spatial phenomenon to capture the magnitude of gains from the increased defense spending in the region. We are using panel unit-root; panel cointegration and panel-Granger causality to highlight the fundamental relationship between the variables. We conclude by discussing the issues as well as quantifying the consequences of present geostrategic conditions associated with these economies.
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    The Effects of Capital Formation on Economic Growth in India: Evidence from ARDL-bound Testing Approach
    (Sage, 2016-10) Bal, Debi Prasad
    This article examines the impact of capital formation on economic growth in India covering the period from 1970 to 2012. This paper traces a long-run equilibrium relation between capital formation and economic growth and other control variables by using autoregressive distributed lag (ARDL) model. The error correction (ECM) model shows that the capital formation, trade openness, exchange rate and total factor productivity positively affect the economic growth and the inflation negatively affects the economic growth in the short run. It is recommended that government increases the level of capital formation in order to achieve a higher level of economic growth.
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    Is Public Debt a Burden for India?
    (Wiley, 2016-03) Bal, Debi Prasad
    In this paper, we investigated whether the government debt caused a burden for India over the period 1970–2013. We achieved this goal using Bohn's (1998) hypothesis in a structural VAR framework. This study did not find evidence to support Bohn's hypothesis in the context of India because no statistically significant relationship between public debt and gross primary deficit was found. Second, this study observed a positive response of interest payments due to the shock of public debt, which is not surprising. Third, a positive shock of public debt was statistically significant and negatively affected developmental expenditure. Similarly, interest payments negatively affected the gross primary deficit. We concluded that public debt in India was not a burden for the country.
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    Do Macroeconomics Channels Matter for Examining Relationship Between Public Debt and Economic Growth in India?
    (Springer, 2017-05) Bal, Debi Prasad
    This paper investigates the impact of public debt on economic growth using key macroeconomic channels for the period 1970–2013 in the context of India. The analysis is undertaken in two different steps: first, it is examined whether public debt has any nonlinear impact on economic growth and second, determines the key channels through which public debt affects economic growth. The results derived from 2SLS model show that public debt positively affects economic growth in the short run, while it shows a negative impact in the long run. Further, by using Nonlinear ARDL approach, this paper supports the existence of a nonlinear impact of public debt on economic growth. The channels through which public debt significantly affects economic growth are households saving, public investment and total factor productivity growth. From policy perspective, we suggest that government should target the public investment and productivity channels for utilizing the public debt in India, and the government should opt for borrowings as long as it leads to capital formation of the country.
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    Is the demand for crude oil inelastic for India? Evidence from structural VAR analysis
    (Elsevier, 2018-07) Bal, Debi Prasad
    We examine the dynamics of crude oil demand, crude oil price, and economic growth over the period of 1997–2016 in case of India. We derive the results from DNS unit root test and it indicates that all variables are stationary in their first order difference. Further, we apply Narayan and Popp (2010) two structure break test and find two break points, one in January 2002 and another one in November 2011 in case of crude oil price. Finally, the Structural VAR analysis depicts that there exists a negative and significant relation between crude oil price dummy and crude oil demand over the period. Further, the price elasticity shows that the percentage changes of crude oil demand response less as compare to the rise in crude oil price. This clearly suggests that crude oil price is moderately inelastic. This overall implies that global crude oil price fluctuation has not brought down India's crude oil import to a greater extent. In order to erase the bulging oil import bill, alternative strategies of producing methanol blended oil, revival of sick oil well production, and adoption of phase wise clean energy system could curb the import dependence of crude oil.
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    Does the Indian Economy Support Wagner’s Law? An Econometric Analysis
    (Eurasian Journal of Business and Economics, 2010) Arora, Rahul
    The present study endeavors to examine the validity of Wagner’s Law in India over the period 1950/51 to 2007/08. Six versions of Wagner’s hypothesis given by different economists have been estimated which support the existence of long-run relationship between economic growth and growth of public expenditure. Two structural breaks have also been given to test the impact of structural changes in Indian economy on the growth of public expenditure. It has been found that the first structural break given for mild-liberalization period causes insignificant changes in the growth elasticity of public expenditure. However, the observed change in the elasticity due to the second phase of intensive liberalization is statistically significant. Nevertheless, the Wagner’s law is still supported during the intensive phase of liberalization given a significant fall in the elasticity. Empirical evidences regarding the short-run dynamics refute the existence of any relationship between the economic growth and the size of the government expenditure
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    Integrating the issue of infrastructural investment with economic growth: The case of India
    (AGER, 2016) Rao, N.V.M.
    The development of a country’s infrastructure is instrumental in accelerating its economic growth. The inadequacy in the infrastructure provisions hinders population to promote self reliance in economic sectors, thereby proving to be a hindering factor to economic growth. Through this paper, we have aimed to investigate the relationship between investment in key infrastructure sectors and economic growth, in order to see how these sectors impact India’s economic growth and how significant this impact is. Further, a detailed qualitative analysis of all the infrastructure sectors involved in our study has been done with a focus on explaining the reasons behind significance/ insignificance of a particular sector. In the final part of analysis, a budget allocation model has been formulated with the help of linear programming technique. This model gives us a fresh viewpoint of the prospective inclination of government budget, and its extent of allocation to the diversity of infrastructure sectors.
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    Public Infrastructure Investment and Economic Growth : A Sector Wise Investigation for India Using Westerlund Panel Cointegration Approach
    (The Romanian Economic Journal, 2016) Rao, N.V.M.
    The paper aims to empirically analyze the relationship between Public Infrastructure Investment and economic growth for India using yearly data for its twenty-eight states (excluding Telangana) over the time-period of 1999-00 to 2014-15. We have aimed to assess this eye catching issue after the recent focus of Indian government to devote a majority of public funds to finance Infrastructure. For all the states, we have taken Public Investment data for six major sub sectors falling under overall Infrastructure sector: Transport, Education, Sports, Art and Culture, Medical and Public Health, Water supply and sanitation, Irrigation, Energy/Power. The Per Capita Gross State Domestic Product is taken as an indicator to represent economic growth. For empirical analysis, we apply panel unit root and cointegration tests, and estimate a panel error correction model. The Per Capita Gross State Domestic Product along with Public Investment in analyzed sectors have a unit root at their levels suggesting that there is presence of long-term relationships among the variables for the whole sample. Finally, Granger causality tests are applied to check for the presence of causal relationships between Per Capita Gross State Domestic Product and Public Investment in different sub sectors of Infrastructure. The research study proposes that the state governments across India should focus upon private as well as foreign direct investment options which would ultimately help in improving the landscape of India’s Infrastructure sector.
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    Examining the impact of public investment and private investment on economic growth: empirical evidence from BRICS nations
    (Inder Science, 2017) Rao, N.V.M.
    : This paper examines the factors impacting economic growth and the interlinkages of public investment, foreign direct investment (FDI), and private domestic investment using a panel data sample of Brazil, Russia, India, China and South Africa (BRICS) group of nations covering the time period of 1990 to 2014. We have made use of economic growth models suggested by Vu Le and Suruga (2005) in order to estimate economic growth and the individual impact of public investment on FDI and private domestic investment, respectively. The empirical results indicate that the private domestic investment along with FDI play a significant role in contributing towards economic growth. Further, analysing the impact of public investment on FDI and private domestic investment suggests that an increase in public investment in BRICS nations reduces the positive impact of FDI and private domestic investment on economic growth (crowding-out effect) when exceeding certain extent levels. Hence, we can conclude that from an overall prospective, public investment in BRICS nations has a substitutable effect on FDI and private domestic investment.