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Effects of terms of trade and its volatility on economic growth in India

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  • Jawaid, Syed Tehseen
  • Raza, Syed Ali

Abstract

This study investigates the effect of terms of trade and its volatility on economic growth in India by using the annual time series data from the period 1980 to 2010. Cointegration results suggest the significant positive long run relationship between terms of trade and economic growth. On the other hand, volatility of terms of trade has negative and significant effect on economic growth. Sensitivity analysis confirms that the results are robust. It is concluded that beneficial and less volatile terms of trade is better for economic growth in India. Policy makers should focus on diversifying Indian exports to minimize the volatility in terms of trade to ensure economic growth in the country.

Suggested Citation

  • Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Effects of terms of trade and its volatility on economic growth in India," MPRA Paper 38998, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38998
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    Cited by:

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    2. Syed Ali Raza & Syed Tehseen Jawaid & Mohammad Haris Siddiqui, 2016. "Electricity Consumption and Economic Growth in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(2), pages 200-215, September.
    3. Robert Stojanov & Daniel Němec & Libor Žídek, 2019. "Evaluation of the Long-Term Stability and Impact of Remittances and Development Aid on Sustainable Economic Growth in Developing Countries," Sustainability, MDPI, vol. 11(6), pages 1-18, March.
    4. Gloria Clarissa O. Dzeha, 2016. "The decipher, theory or empirics: a review of remittance studies," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 113-134.
    5. Dr. Fentaw Leykun, 2020. "Insurance Market Development, Financial Service Export and Economic Growth: Evidence from East African Countries," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(1), pages 57-98.
    6. Nzeh Innocent Chile & Okoli Uju Victoria & Okolie David Ogomegbunam & Okolie Jonathan Ibekwe, 2024. "Marginal propensity to import and terms of trade: Panel granger causality evidence from the East African Community (EAC)," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 17(2), pages 251-269.
    7. Imtiaz Arif Lubna Khan Syed Ali Raza, 2018. "External Resources and Economic Growth: An Empirical Analysis of South Asian Countries," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 21(2), pages 1-17, November.
    8. Ganna KHARLAMOVA & Maksim SITNITSKIY, 2016. "Growing Regional Scientific Migration And Mobility: The European Union And The Eastern Partnership," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 210-234.

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    More about this item

    Keywords

    Terms of Trade; Volatility; Economic Growth;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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