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Fiscal Impulse And Sectoral Output €“ Evidence From Indian States

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  • GAUTAM NEGI

    (Lal Bahadur shastri Institute of Management, Delhi, India, Postal Address – Plot No. 11/7, Sector 11, Dwarka, New Delhi -110075)

Abstract

The study covering the states of India for the period 2005 up to 2020 examines the growth effect of fiscal impulse on sectoral output. Gross value added of sectors is taken as the dependent variable while fiscal impulse as a ratio of the state domestic product has been taken as the explanatory variable. Four control variables are additional included. The study employs the generalized method of moments (GMM) for estimation. For industry and the services sector, growth effect of fiscal impulse is found to be positive and significant while for agriculture sector the effect is not significant. A sample split of states reveal developed states to be benefitting more from the growth effect of fiscal impulse as compared to the lesser developed states. The study contributes to the literature on fiscal policy and growth among the states of India.

Suggested Citation

  • Gautam Negi, 2021. "Fiscal Impulse And Sectoral Output €“ Evidence From Indian States," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 28, pages 151-167, December.
    • Handle: RePEc:aic:revebs:y:2021:j:28:negig
    DOI: 10.47743/rebs-2021-2-0008
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    More about this item

    Keywords

    fiscal impulse; output; growth; GMM;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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