Authors : Bipasha Maity
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.
Bipasha Maity , 2016. Test of Causality Between Two Macro Variables: A Case of India. International Business Management, 10: 4653-4658.