IDEAS home Printed from https://ideas.repec.org/a/ids/ijbglo/v23y2019i1p104-119.html
   My bibliography  Save this article

Relationship among gold price, exchange rate and current account deficit - a study in Indian context

Author

Listed:
  • Raman Preet Singh
  • Nawal Kishor

Abstract

This study attempts to investigate the causal relationship between gold price, exchange rate and current account deficit (CAD) on the basis of time series data for 14 years from 2002 to 2016. In recent days gold has attracted the attention of economists, researchers, policy-makers and common man. There is a general view that recent current account deficit (CAD) is attributed to mainly gold import only as crude oil price has fallen considerably. It is with this backdrop, this article tries to unveil any dynamic, if exist, between gold price and CAD applying augmented Dickey-Fuller (ADF) test and Phillips-Perron (PP) Test which are used to test the stationarity of time series data and block exogeneity Wald Test to establish the causality relationship among them. On the basis of quarterly observation for the aforesaid period, it has been found that these three variables are stationary of order one and the study further found the existence of bi-directional Granger causality between gold price and CAD, which is running from gold price to CAD and vice-versa. The findings of the study have significant implication for India's economic policy and facilitate the Government to make strategies to reduce the CAD.

Suggested Citation

  • Raman Preet Singh & Nawal Kishor, 2019. "Relationship among gold price, exchange rate and current account deficit - a study in Indian context," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 23(1), pages 104-119.
    • Handle: RePEc:ids:ijbglo:v:23:y:2019:i:1:p:104-119
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=100789
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijbglo:v:23:y:2019:i:1:p:104-119. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=245 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.