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The multivariate dynamic causal relations between financial depth, inflation, and economic growth

Philippine Review of Economics

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Title The multivariate dynamic causal relations between financial depth, inflation, and economic growth
 
Creator Pradhan, Rudra P.; Indian Institute of Technology
Nishigaki, Yasuyuki; Ryukoku University
Hall, John H.; University of Pretoria
 
Subject autoregressive distributive lag bounds testing, vector error correction modeling, financial depth, inflation, economic growth
 
Description This paper examines the dynamic causal relationship between financial depth, inflation and economic growth in India and Pakistan using an autoregressive distributive lag bounds testing procedure and vector error correction modeling approach. The paper uses three proxies for financial depth: broad money supply; domestic credit to private sector; and domestic credit provided by the banking sector. The results of this study prove that financial depth, inflation, and economic growth are cointegrated, indicating the presence of a long-run equilibrium relationship between these variables. The study also finds that financial depth, inflation, and economic growth are Granger-causing each other. It is therefore recommended that both India and Pakistan should intensify their financial depth in order to increase economic growth and reduce inflation.JEL classification: O43, O16, E44, E31
 
Publisher Philippine Review of Economics
 
Contributor —
 
Date 2017-11-02
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Identifier http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/950
 
Source Philippine Review of Economics; Vol 54, No 1 (2017); 63-93
1655-1516
 
Language en
 
Rights Copyright (c) 2018 Philippine Review of Economics