International Reserves Accumulation and Economic Growth: Evidence from India

International Journal of Engineering and Management Research, Volume 5, Issue 2, 2015

7 Pages Posted: 22 Jan 2016

See all articles by Dr Mohammad Kashif

Dr Mohammad Kashif

Pondicherry University - Department of International Business; School of Commerce and Management, IIMT University, Meerut

P. Sridharan

Pondicherry University - Department of International Business

Date Written: April 1, 2015

Abstract

The present study analyses empirically the impact of economic growth on international reserves in India. We employed time series data with annual frequency from 1993 to 2013. We develop an econometric model relating RES to ECON variables and used logarithmic transformation of the variables for econometric estimation. The econometric tools such as Augmented Dickey-Fuller (ADF) test, Johansen cointegration test and vector error correction model were applied. The cointegration test results suggest that there is an existence of a stable long-run equilibrium relationship between international reserves and economic growth. The VECM of international reserves reveals that lagged independent variables shows the expected signs i. e. economic growth have significant effect on international reserves. Findings of the study suggest that economic growth is positively related to international reserves. This implies that India has to involve more actively in foreign reserve management practices.

Keywords: Economic growth, International reserves, VECM, Cointegration, India

JEL Classification: F31, F42

Suggested Citation

Kashif, Dr Mohammad and Kashif, Dr Mohammad and Sridharan, P., International Reserves Accumulation and Economic Growth: Evidence from India (April 1, 2015). International Journal of Engineering and Management Research, Volume 5, Issue 2, 2015, Available at SSRN: https://ssrn.com/abstract=2719380

Dr Mohammad Kashif (Contact Author)

Pondicherry University - Department of International Business ( email )

School of Management
R V Nagar , Kalapet
Puducherry, UT 605014
India

School of Commerce and Management, IIMT University, Meerut ( email )

School of Management
R V Nagar , Kalapet
Puducherry, UT 605014
India

P. Sridharan

Pondicherry University - Department of International Business ( email )

Puducherry 605014
India

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