Tabassum, Tanjila

Causal Relationship of Economic Factors with GDP Growth of Two Emerging Markets of South Asia: Bangladesh and India

School of Economics and Finance, Victoria University of Wellington

Substantial change in world economy in last few decades has made emerging markets more influential than ever before. This study tries to investigate causal relationship of three economic factors (GCF, FDI, and trade) with GDP growth of two emerging markets of South Asia: Bangladesh and India. External factors like globalization (KOF index) and financial crisis (VIX index) have also been incorporated as and where deemed necessary. Time series data (1977-2015) of both countries taken from sources like World Development Indicator have been analysed. Johansen Co-integration method indicates that there exist long run equilibrium relationship among stationary form of the concerned variables for both countries. The results of Granger Causality test suggest that (1) Trade and GDP growth granger cause each other, (2) GCF and KOF granger cause GDP growth and (3) FDI for India has bidirectional relationship with GDP growth.

This presentation is eligible for the NZSA Student Prize.