Relationship between exports, imports and economic growth in India: a cointegration analysis

This paper is an attempt to explore the causal relationship between exports, imports and economic growth of Indian economy using time series data running from 1990 to 2016. We have used Co integration, Granger Causality analysis and Vector Error Correction Model (VECM) to test the hypothesis about the presence of causality and co integration among the variables. The Johansen co integration test confirmed that exports, imports and GDP are co integrated, indicating an existence of long run equilibrium relationship among all the variables. Granger Causality test shows one-way causality between GDP and exports whereas causality is found to be absent between imports and exports.