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Investigating the impact of global financial crisis on indian economy in an aggregate demand framework

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  • Rajesh, Raj
  • Bordoloi, Sanjib

Abstract

In this paper, the impact of global financial crisis on India’s Gross Domestic Product (GDP) is investigated upon in an aggregate demand framework using quarterly data for the period from Q2 of 1996 to Q1 of 2010. GDP, consumption expenditure, capital formation and export were found to be co-integrated. Co-integration estimation re-affirms that domestic consumption remains the key driver of India’s GDP growth. Our analysis establishes that though India’s trade sector dwindled and investment activity declined in the aftermath of global financial crisis, its GDP growth slackened only marginally as domestic consumption provided the necessary buffer in limiting the adverse impact of global financial crisis on the Indian economy.

Suggested Citation

  • Rajesh, Raj & Bordoloi, Sanjib, 2012. "Investigating the impact of global financial crisis on indian economy in an aggregate demand framework," MPRA Paper 40416, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40416
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    References listed on IDEAS

    as
    1. Abhijit Das & Rashmi Banga & Dinesh Kumar, 2011. "Global Economic Crisis : Impact and Restructuring of the Services Sector in India," Trade Working Papers 23225, East Asian Bureau of Economic Research.
    2. Fidrmuc, Jarko & Korhonen, Iikka, 2010. "The impact of the global financial crisis on business cycles in Asian emerging economies," Journal of Asian Economics, Elsevier, vol. 21(3), pages 293-303, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    India; Aggregate Demand; Trade; Financial Crisis;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other

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