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Is Real Depreciation or Rising Government Debt Contractionary in India? A Simultaneous-Equation Model

Joseph H. Miller Endowed Professorship in Business, Department of Management & Business Administration, College of Business, Southeastern Louisiana University, Hammond, LA 70402, USA

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Wen-jen Hsieh

Department of Economics, National Cheng-Kung University, Tainan City 70101, Taiwan

E-mail Address: whsieh@mail.ncku.edu.tw

Corresponding author.

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https://doi.org/10.1515/gej-2017-0010Cited by:1 (Source: Crossref)

Abstract

Based on a sample during 1978–2014, this paper finds that India’s real GDP has a positive relationship with real depreciation during 1978–2002, the government debt/GDP ratio, the real stock price, the growth rate of U.S. real GDP, and a negative relationship with real depreciation during 2003–2014, the real lending rate and the expected inflation rate. Therefore, the stage of economic development may play an important role in deciding whether real depreciation or real appreciation may promote economic growth.

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JEL Classification: F31, F41, E62

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Is Real Depreciation or Rising Government Debt Contractionary in India? A Simultaneous-Equation Model

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