International Business Management

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Test of Causality Between Two Macro Variables: A Case of India

Bipasha Maity
Page: 4653-4658 | Received 21 Sep 2022, Published online: 21 Sep 2022

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Abstract

There are a plenty of research attempted to capture the causal relationship between GDP and Government Expenditures (GE). Since, the direction of causal relationship between these two macro variables is still inconclusive, I have taken a modest attempt to test a few hypotheses with respect to the relationship in question through this research. I gathered data on GDP and GE over a period 1960-2014 and fit the Vector Autoregressive (VAR) and Vector Error-Correction (VEC) models to data. Out of three hypotheses, one is confirmed that is GE Granger causes GDP of India. Policy makers/managers would get insight from the findings of this research to formulate better public policy/business strategy.

How to cite this article:

Bipasha Maity. Test of Causality Between Two Macro Variables: A Case of India.
DOI: https://doi.org/10.36478/ibm.2016.4653.4658
URL: https://www.makhillpublications.co/view-article/1993-5250/ibm.2016.4653.4658