Granger Causality of GDP with Interest Rate and Money Supply

This paper investigates the Granger-causality among GDP, Interest rate and money supply over the period 1988 to 2012. The findings imply that the -causality is bidirectional in majority of cases. In one-way causality, the pattern is not homogenous: import has higher effect on economic growth instead of export. Evolution of Interest rate, money supply and gross domestic product are in close relationship. This study examines the relationship between Interest rate, money supply and economic growth in India. This paper examines the various research studied conducted with reference to Indian and International context. This paper tries to find out the important factors those are affecting the Gross Domestic Product directly or indirectly. Data of 24 years was collected from the website of, yahoo and and Johansen Co integration test is applied. This paper is divided into four sections. First section covers review of literature, second section covers objective of the study and methodology, third section is on result and findings and fourth section covers conclusion.

Keywords: GDP, Interest Rate, Money Supply, Co- Integration.

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