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VOL. 7, ISSUE 4 (2025)
Causality between economic growth and fiscal performance in Punjab: Empirical evidence
Authors
Dr. Harjeet Singh
Abstract
This paper, titled "Causality between Economic Growth and Fiscal
Performance in Punjab: Empirical Evidence," investigates the intricate
relationships between various economic indicators in Punjab. Initially,
descriptive statistics for key economic variables such as Gross Domestic
Product (GDP) and fiscal indicators were analysed. Unit root tests revealed
that most variables were non-stationary at their levels but became stationary
after first differencing, enabling the application of robust econometric
techniques. The Granger causality test identified significant temporal
relationships among variables, with unidirectional causality observed from CF
to GFD, WPI to CF, NTR to GFD, SDP to GFD, TR to GFD, TR to NTR, WPI to NTR, TR
to SDP, and TR to WPI. Bidirectional causality between NTR and GFD indicated
mutual predictive relationships. The Johansen-Juselius cointegration tests
confirmed long-term equilibrium relationships among the variables, though
discrepancies between the Trace and Max-Eigenvalue tests suggested further
investigation was needed. Vector Error Correction Models (VECMs) provided insights
into both short- and longterm dynamics among the variables. Additionally, the
ARDL Bound Test Cointegration approach affirmed a strong long-run relationship
between Punjab's State Domestic Product (SDP), fiscal indicators, and other
macroeconomic variables, highlighting their influence on Punjab's economic
growth.
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Pages:1-6
How to cite this article:
Dr. Harjeet Singh "Causality between economic growth and fiscal performance in Punjab: Empirical evidence". International Journal of Finance and Commerce, Vol 7, Issue 4, 2025, Pages 1-6
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