Theoretical and Applied Economics
No. 4 / 2016 (609), Winter
Foreign aid, macroeconomic policies and economic growth nexus in India: An ARDL bounds testing approach
Birla Institute of Technology and Science (BITS), India
A. K. GIRI
Birla Institute of Technology and Science (BITS), India
Madhu SEHRAWAT
T.A. Pai Management Institute, Manipal, India
Abstract. The purpose of this paper is to examine the effectiveness of foreign aid on economic growth in Indian economy using annual data from 1970 to 2014. The cointegration test confirms a long run relationship between real GDP per capita and foreign aid for India. The study finds a positive and significant impact of foreign aid on economic growth in India both in long run and in short run. Our results provide strong evidence that effectiveness of foreign aid on economic growth is contingent on macroeconomic policy environment in India. The VECM results confirm short-run and long run unidirectional causality running from foreign aid, government expenditure and trade openness to economic growth in India. Further, the results of the variance decomposition approach indicate that economic growth in India mostly explained by foreign aid. Further, the impulse response function result indicates that there is positive response in economic growth due to shock stemming in foreign aid. The findings and the results are useful guidelines for major stakeholders, including donors and the government of recipient countries for designing framework for aid effectiveness.
Contents
The influence of fiscal freedom, government effectiveness and human development index on tax evasion in the European Union
Limitation of ARIMA models in financial and monetary economics
The Romania's challenges regarding the integration in the Euro Area
Does remittance drive economic growth in emerging economies: Evidence from FMOLS and Panel VECM
Effectiveness of monetary policies in OECD countries
Determinants of household loans
Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply
Migration – trade nexus revisited: Empirical evidence from Turkish emigrants in OECD countries
New pillars of the banking business model or a new model of doing banking?
Effects of R&D and innovation on income in EU countries: new generation panel cointegration and causality analysis
The major economic evolution of Romania by the middle of 2016
Foreign aid, macroeconomic policies and economic growth nexus in India: An ARDL bounds testing approach
Human nature in the economic behavior based on the neoclassical economic model
Determinants of nonperforming assets-bank-specific and macroeconomic factors: A panel data analysis of different group of commercial banks operating in India
Gradualistic strategy of transition to market economy
Financial liberalization and economic growth: Evidence from Tunisia
Public target space as key factor for public policy implementation
The relationships among the returns of investment instruments: a vector autoregressive approach for Turkey
Current account sustainability in SAARC economies: Evidence from combined cointegration approach
Information asymmetry and technical efficiency: Case of a panel of Tunisian insurance companies
FDI and export spillovers using Heckman’s two step approach: Evidence from Turkish manufacturing data