Stationarity Test for Aggregate Outputs in the Presence of Structural Breaks

D.K. Srivastava () and K.R. Shanmugam
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D.K. Srivastava: Madras School of Economics

Working Papers from Madras School of Economics,Chennai,India

Abstract: This study tests for the stationarity of aggregate output (GDP at factor cost) and its three major components, namely GDP agriculture, GDP industry and GDP services in the presence of structural breaks during 1950-51 to 2011-12. Results indicate that (i) the GDP has three break points; (ii) GDP agriculture contains one while the GDP industry and GDP services contain four breaks each; and (iii) all variables are trends stationary with one or more structural breaks. Our alternative test, which tests the null of unit root for the study variables after removing the effects of trend and structural breaks, also confirms that the aggregate output variables are trend stationary with structural breaks. We also compare the identified structural break dates with earlier studies.

Keywords: Structural breaks; Indian economy; Time series; Stationarity test (search for similar items in EconPapers)
JEL-codes: C1 C22 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-07
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Citations: View citations in EconPapers (3)

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