Inflation and Growth Dilemma: An Econometric Analysis of the Indian Economy

L Krishna Veni and Pradeep Choudhury ()

The IUP Journal of Financial Economics, 2007, vol. V, issue 1, 79-87

Abstract: This study examines the relationship between inflation and growth of the Indian economy during 1981-2004. The results of the causality test prove that the variables, viz., growth and inflation are independent of each other in India. The results of the cointegration test confirm the fact that the two variables—inflation and growth—are not cointegrated. Therefore, it is evident that there is no long run relationship between these two variables in India. Based on the findings, this study suggests that the government has to focus on the acceleration of economic growth and to take timely measures to control inflation to maintain economic stability.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjfe:v:05:y:2007:i:1:p:79-87

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