Explaining India’s current account deficit: a time series perspective
Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin...
Đã lưu trong:
| Những tác giả chính: | , |
|---|---|
| Định dạng: | Bài viết |
| Ngôn ngữ: | English |
| Được phát hành: |
University of Economics Ho Chi Minh City
2023
|
| Truy cập trực tuyến: | https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2018-0089/full/html http://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115571 |
| Các nhãn: |
Thêm thẻ
Không có thẻ, Là người đầu tiên thẻ bản ghi này!
|
| Thư viện lưu trữ: | Thư viện Trường Đại học Đà Lạt |
|---|
| id |
oai:scholar.dlu.edu.vn:DLU123456789-115571 |
|---|---|
| record_format |
dspace |
| spelling |
oai:scholar.dlu.edu.vn:DLU123456789-1155712023-03-08T04:10:10Z Explaining India’s current account deficit: a time series perspective Behera, Harendra Kumar Yadav, Inder Sekhar Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models. 2023-03-08T04:10:10Z 2023-03-08T04:10:10Z 2019 Article 2515-964X https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2018-0089/full/html http://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115571 10.1108/JABES-11-2018-0089 en Journal of Asian Business and Economic Studies, Volume 26, Issue 1; p. 117-138 application/pdf University of Economics Ho Chi Minh City |
| institution |
Thư viện Trường Đại học Đà Lạt |
| collection |
Thư viện số |
| language |
English |
| description |
Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models. |
| format |
Article |
| author |
Behera, Harendra Kumar Yadav, Inder Sekhar |
| spellingShingle |
Behera, Harendra Kumar Yadav, Inder Sekhar Explaining India’s current account deficit: a time series perspective |
| author_facet |
Behera, Harendra Kumar Yadav, Inder Sekhar |
| author_sort |
Behera, Harendra Kumar |
| title |
Explaining India’s current account deficit: a time series perspective |
| title_short |
Explaining India’s current account deficit: a time series perspective |
| title_full |
Explaining India’s current account deficit: a time series perspective |
| title_fullStr |
Explaining India’s current account deficit: a time series perspective |
| title_full_unstemmed |
Explaining India’s current account deficit: a time series perspective |
| title_sort |
explaining india’s current account deficit: a time series perspective |
| publisher |
University of Economics Ho Chi Minh City |
| publishDate |
2023 |
| url |
https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2018-0089/full/html http://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115571 |
| _version_ |
1765278410402168832 |