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Inflows and their Macroeconomic Impact in India a VAR Analysis

Author

Listed:
  • Narayan Sethi

    (Dept. of Humanities and Social Sciences, National Institute of Technology (NIT), Rourkela, Odisha, India)

Abstract

The present study attempts to examine the effects of private foreign capital inflows (FINV) on macroeconomic variables in India. The study also examines the trends and composition of capital inflows into India. Using the Vector Autoregression (VAR) method, this paper specifically examines effects of private foreign capital inflows (FINV) on macroeconomic variables in India. This study is based on the monthly data from 1995:04 to 2011:07 and incorporating the macroeconomic variables such as exchange rate (EXR), inflation, money supply (M3), export (EXPO), import (IMP), foreign exchange reserve (FOREX) and economic growth (IIP as proxy of GDP). The important observations emerge from the VAR analysis which shows there is dynamic short and long equilibrium relationship between few macroeconomic variables like exchange rate (EXR), foreign exchange reserve (FOREX), index of industrial production (IIP) and money supply (M3) with private foreign capital inflows (FINV) during the study period from 1995:04 to 2011:07

Suggested Citation

  • Narayan Sethi, 2012. "Inflows and their Macroeconomic Impact in India a VAR Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(45), pages 93-142, December.
    • Handle: RePEc:rej:journl:v:15:y:2012:i:46:p:93-142
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Private Foreign Capital Inflows; Macroeconomic Variable; Vector Autoregression (VAR); India;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F30 - International Economics - - International Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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