EconPapers    
Economics at your fingertips  
 

The Sustainability of India's current account (1950-2003): Evidence from parametric and non-parametric unit root and cointegration tests

Mark Holmes (), Theodore Panagiotidis () and Abhijit Sharma ()

Working Paper series from Rimini Centre for Economic Analysis

Abstract: This study conducts an investigation into the sustainability of the Indian current account over the study period 1950-2003. It is argued that a necessary condition for current account sustainability is that exports and imports are cointegrated. After testing for unit roots that allow for a structural break, we employ parametric tests for cointegration: based on Johansen (1995) and Saikonnen and LŸtkepohl (2000) as well as the nonparametric procedure proposed by Breitung (2002) and Breitung and Taylor (2003) that does not assume linearity. By employing these procedures recursively, two distinct regimes are identified characterised by whether or not imports and exports are cointegrated. The regime of non-cointegration runs until the late 1990s and the second regime of cointegration is present after that. This latter regime coincides with the liberalisation of the Indian economy.

Keywords: India; current account; sustainability; cointegration; nonparametric cointegration; rolling and recursive p-values data (search for similar items in EconPapers)
JEL-codes: C5 F1 F4 (search for similar items in EconPapers)
Date: 2007-07
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp41_07.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:41_07

Access Statistics for this paper

More papers in Working Paper series from Rimini Centre for Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Marco Savioli ().

 
Page updated 2019-11-14
Handle: RePEc:rim:rimwps:41_07