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

Debi Prasad Bal, Devi Prasad Dash and Bibhudutta Subhasish ()

Global Business Review, 2016, vol. 17, issue 6, 1388-1400

Abstract: 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.

Keywords: Capital formation; economic growth; ARDL; total factor productivity (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:globus:v:17:y:2016:i:6:p:1388-1400

DOI: 10.1177/0972150916660403

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