Testing the neoclassical long-run and the Keynesian short-run effects of investment on output and growth in India
This study examines the neoclassical long-run and the Keynesian short-run effects of investment on output and tests the null of noncausality between investment and growth in India. The long-run model is estimated using the single-equation and maximum-likelihood system estimators. All of the estimators suggest the cointegrating relationship between investment and output, and the results are robust to the choice of estimator. The conventional and new cumulative sum (CUSUM) tests show the long-run stability of equilibrium residuals and reinforce the cointegrating relationship. The error-correction model suggests bidirectional Granger causality between investment and growth. The investment constitutes around one-fourth of the total weight in aggregate demand and, as corollary of such major weight and the significant effects, it remains a potential source of short-run economic fluctuations. A sustained acceleration of investment is essentially crucial for the acceleration and sustainability of economic growth.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 31 (2008)
Issue (Month): 2 (December)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348|
When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:31:y:2008:i:2:p:271-298. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)
If references are entirely missing, you can add them using this form.