Structural Breaks and Unit Roots in Indian Macroeconomic Variables

K.G. Suresh and C.S. Shylajan
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K.G. Suresh: IBS-Hyderabad, IFHE University, Hyderabad, India
C.S. Shylajan: IBS-Hyderabad, IFHE University, Hyderabad, India

Theoretical and Applied Economics, 2015, vol. XXII, issue 4(605), Winter, 145-150

Abstract: This study intends to examine the presence of structural breaks in Indian GDP, GNP and its various components. We have used recently developed unit root test suggested by Narayan and Popp (2010), which can identify two structural breaks. It is found that the extensive reforms in the 1990’s affected the growth of GDP, GNP and sectors such as trade, Finance and public administration while agriculture and manufacturing sectors are unaffected. The 1980’s initial reforms have impact on GDP, GNP, Finance and public administration. It is found that post 1990 reforms implemented in India failed to have an effect on agriculture and manufacturing. This necessitates further reforms in agriculture and manufacturing sector to accelerate the growth in these sectors. This is the first study to use the Narayan and Popp (2010) unit root test with two structural breaks to check the stationarity of the economic times series and identify the breaks in Indian context.

Keywords: Economic reforms; economic time series; Structural breaks; unit roots. (search for similar items in EconPapers)
Date: 2015
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