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Investigating the impact of global financial crisis on indian economy in an aggregate demand framework


  • Rajesh, Raj
  • Bordoloi, Sanjib


In this paper, the impact of global financial crisis on India’s Gross Domestic Product (GDP) is investigated upon in an aggregate demand framework using quarterly data for the period from Q2 of 1996 to Q1 of 2010. GDP, consumption expenditure, capital formation and export were found to be co-integrated. Co-integration estimation re-affirms that domestic consumption remains the key driver of India’s GDP growth. Our analysis establishes that though India’s trade sector dwindled and investment activity declined in the aftermath of global financial crisis, its GDP growth slackened only marginally as domestic consumption provided the necessary buffer in limiting the adverse impact of global financial crisis on the Indian economy.

Suggested Citation

  • Rajesh, Raj & Bordoloi, Sanjib, 2012. "Investigating the impact of global financial crisis on indian economy in an aggregate demand framework," MPRA Paper 40416, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40416

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    References listed on IDEAS

    1. Fidrmuc, Jarko & Korhonen, Iikka, 2010. "The impact of the global financial crisis on business cycles in Asian emerging economies," Journal of Asian Economics, Elsevier, vol. 21(3), pages 293-303, June.
    2. Abhijit Das & Rashmi Banga & Dinesh Kumar, 2011. "Global Economic Crisis : Impact and Restructuring of the Services Sector in India," Trade Working Papers 23225, East Asian Bureau of Economic Research.
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    More about this item


    India; Aggregate Demand; Trade; Financial Crisis;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other

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