A simultaneous equation model of economic growth in India

Empirical investigations aimed at determining what relationship, if any, exists between savings and real GDP has drawn ambiguous results. This is also the case for India, where all empirical studies have used the VAR methodology. In this study, we outline a dynamic simultaneous equations model. The model captures the interrelationships between, domestic savings, domestic capital formation and real GDP. Simultaneous equations are then developing to determine those variables.