31Dec 2016

THRESHOLD RATE OF INFLATION AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA.

  • 2nd M.A. Student, Department of Economics, Sri Sathya Sai Institute of Higher LearningPrasanthi Nilayam-515 134, Andhra Pradesh, India.
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During the last decade of the twentieth century, economics witnessed a revival of interest in the determinants of the rate of long-run growth. The monetary and fiscal policy variables play a predominant role in determining the growth of the economy. The major challenge for the monetary authorities is to keep the inflation at moderate levels. Which rate of inflation is tolerable for the Indian economy is the most debatable topic among the policy makers and researchers. In this study an attempt has been made to estimate the growth model using different levels of threshold inflation rates between the time period 1971-2012 using annual data. The Ordinary Least Squares (OLS) regression results show that the threshold rate of 6% is the acceptable inflation rate for the Indian economy. Alongside, through Granger causality we found that fiscal deficit (FD), Investment (I) and agriculture growth rate are major determinants of the growth in the gross domestic product (GDP).


[K. B. Swamy and Ankush Sharma. (2016); THRESHOLD RATE OF INFLATION AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA. Int. J. of Adv. Res. 4 (Dec). 2173-2188] (ISSN 2320-5407). www.journalijar.com


K. B. Swamy and Ankush Sharma
Sri Sathya Sai Institute of Higher Learning Prasanthi Nilayam-515 134, Andhra Pradesh, India

DOI:


Article DOI: 10.21474/IJAR01/2634      
DOI URL: http://dx.doi.org/10.21474/IJAR01/2634