The Effects of Capital Formation on Economic Growth in India: Evidence from ARDL-bound Testing Approach

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. T...

Full description

Saved in:
Bibliographic Details
Published inGlobal business review Vol. 17; no. 6; pp. 1388 - 1400
Main Authors Bal, Debi Prasad, Dash, Devi Prasad, Subhasish, Bibhudutta
Format Journal Article
LanguageEnglish
Published New Delhi, India SAGE Publications 01.12.2016
Subjects
Capital formation
economic growth
ARDL
total factor productivity
Online AccessGet full text

Cover

More Information
Summary: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.
ISSN:0972-1509
0973-0664
DOI:10.1177/0972150916660403