Interrelationship and Interdependence Among Macroeconomic Variables in India
DOI:
https://doi.org/10.17010/aijer/2019/v8i1/142714Keywords:
BOP
, ER (USD), FDI, FPI, GDP, Sensex, Macroeconomic Variables.JEL codes
, F15, F21, F63, P45.Paper Submission Date
, September 28, 2018, Paper Sent Back for Revision, January 12, 2019, Paper Acceptance Date, February 25, 2019.Abstract
India is actively performing on the economic front since the inception of the new economic policy. As it is an open economy, it allows other countries to be a part of its economy. It is pivotal for a country to have coordination among the factors which affect its growth. The study explored the trend and interrelationship among the macroeconomic variables (FDI, FPI, sensex, ER (USD), GDP, and BOP). The quarterly data of six macroeconomic variables were used for the purpose of this study. Trend chart, Augmented Dickey-Fuller Test (ADF), correlation, and regression were put into use to meet the objectives. The results showed that sensex, ER (USD), and GDP were highly correlated. The study also examined the impact of other variables and went on to analyze the impact of other variables on those highly correlated variables. For the data collected, the results showed that GDP and sensex were highly influenced by the FDI, ER (USD), FPI, and BOP; whereas, ER (USD) had no significant impact on the BOP, FDI, and FPI. ER (USD), however, was influenced by GDP and sensex.Downloads
Downloads
Published
How to Cite
Issue
Section
References
Adebisi, A. W., & Arikpo, O. F. (2017). Financial market performance and foreign portfolio inflows to Nigeria: Autoregressive distributive lag approach. International Journal for Research-Granthaalayah, 5(6), 673-688. doi: https://dx.doi.org/10.5281/zenodo.833973
Anayochukwu, O. B. (2012). The impact of stock market returns on foreign portfolio investment in Nigeria. IOSR Journal of Business and Management, 2 (4), 10-19.
Archibald, R. W., & Sleeper, S. (2008). The economic-development case. RAND Corporation, 5 (2), 21-28.
Barguellil, A., Ben-Salha, O., & Zmami, M. (2018). Exchange rate volatility and economic growth. Journal of Economic Integration, 33(2), 1302-1336. https://dx.doi.org/10.11130/jei.2018.33.2.1302
Bose, S., & Coondoo, D. (2004). The impact of FII regulations in India. A time-series intervention analysis of equity flows. Money and Finance Money and Finance, ICRA Bulletin, 2 (18), 54-83.
Catao, L. A. V. (2007). Back to basics: Why real exchange rates? Finance & Development, 5 (3), 46-47.
Dean, M., & Sabastia, M. (2004). Why has world trade grown faster than world output ? Bank of England Quarterly Bulletin. Retrieved from http://www.columbia.edu/~md3405/Other_Paper_1.pdf
Feldman, M., Hadjimichael, T., Lanahan, L., & Kemeny, T. (2015). The logic of economic development: A definition and model for investment. Environment and Planning C: Politics and Space, 34 (1), 5-21. https://dx.doi.org/10.1177/0263774X15614653
George, J. (2016). Is foreign portfolio Investment beneficial to India’s balance of payment ? An exploratory analysis. Paulien Journal of Research and Studies, 1 (1), 153-168.
Gurloveleen, K., & Bhatia, B. S. (2015). An impact of macroeconomic variables on the functioning of Indian stock market: A study of manufacturing firms of BSE 500. Journal of Stock & Forex Trading, 5(1), 1-7.
Hattari, R., & Rajan, R. S. (2011). How different are FDI and FPI Flows? : Distance and capital market integration. Journal of Economic Integration, 26(3), 499-525. https://www.jstor.org/stable/4134879
Hymavathi, C., & Kalpana, D. (2017). A study of analysis of BOP trends with reference to India. International Journal of Science and Research, 6(6), 630-634. Retrieved from https://www.ijsr.net/archive/v6i6/2061704.pdf
Jacob, B. (2015). Impact of exchange rate regimes on economic growth. Undergraduate Economic Review, 12 (1), 1-22. Retrieved from https://digitalcommons.iwu.edu/uer/vol12/iss1/11
Kandil, M. (2009). Exchange rate fluctuations and the balance of payments: Channels of interaction in developing and developed countries. Journal of Economic Integration, 24 (1), 151-174. https://www.jstor.org/stable/23000947
Kravis, I., & Lipsey, R. E. (1978). Price behavior in the light of balance of payment theories. Journal of International Economics, 8 (2), 193-246.
Kumar, N. (2005). Liberalization, foreign direct investment flows and development: Indian experience in the 1990s. Economic and Political Weekly, 40 (14), 1459-1469.
Mathew, J., Vijaykumar, N. V., & Jacob, E. (2013). Balance of payment crisis in India: What the figures say. Arthshastra Indian Journal of Economics & Research, 2(5), 14-26. https://dx.doi.org/10.17010/aijer/2013/v2i5/54526
Pal, P. (1998). Foreign portfolio investment in Indian equity markets : Has the economy benefited ? Economic and Political Weekly, 33 (11), 589-598. Retrieved from https://www.jstor.org/stable/4406523
Rabin, A. A., & Yeager, L. B. (1982). Monetary approach to the balance of payment and exchange rates. Essays in International Finance, 148 (332), 1-30.
Rahman, M. N. (2016). Impact of foreign direct investment inflows on capital account of India’s balance of payments. Business and Economic Research, 6 (1), 111-128. https://dx.doi.org/10.5296/ber.v6i1.8965
Sehgal, S., & Tripathi, N. (2009). Investments strategies of FIIs in the Indian equity market. The Journal of Business Perspective, 13 (1), 11-18. https://dx.doi.org/10.1177/097226290901300102
Sharma, N. S., & Raju, G. R. (2013). Analysis of India’s exchange rate under the new economic policy regime. Arthshastra Indian Journal of Economics and Research, 2(5), 27-34. https://dx.doi.org/10.17010/aijer/2013/v2i5/54528
Skuflic, L., & Botric, V. (2006). Foreign direct investment in Southeast European countries: The role of the service sector. Eastern European Economics, 44(5), 72-90. Retrieved from https://www.jstor.org/stable/4380481
Sun, P., & Heshamti, A. (2010). International trade and its effects on economic growth in China (IZA Discussion Paper No. 5151), 1-36. Retrieved from http://ftp.iza.org/dp5151.pdf
Vijayasri, G. V. (2013). The importance of international trade in the world. International Journal of Marketing, Financial Services & Management Research, 2 (9), 111-119. Retrieved from https://pdfs.semanticscholar.org/0c65/06f1ab891cb40206230f6d841cb7e11796a7.pdf
Waqasa, Y., Hashmi, S. H., & Nazir, M. I. (2015). Macroeconomic factors and foreign portfolio investment volatility: A case of South Asian countries. Future Business Journal, 1 (1-2), 65-74. https://dx.doi.org/10.1016/j.fbj.2015.11.002
