Construction activity and economic growth: what follows what? Evidence from India Online publication date: Mon, 07-Mar-2022
by Rochna Arora; Baljit Kaur
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 15, No. 2/3/4, 2022
Abstract: Construction sector holds a meaty place among all sectors of the economy. The importance of construction sector stems from its promise of strong linkages (both backward as well as forward) with other sectors of the economy. Of all, effect on employment is highly crucial for labour-intensive economy like that of ours. To study which economic variable precedes the other, data are collected on economic variables of gross domestic product and GDP from construction activity for the period running from 1991-2017. The results from long-run causality worked out using Granger test points to long-run causality from construction activity and employment to economic growth and from growth and employment to construction activity. While the short-run causal results which are worked out using Wald test gives evidence in favour unidirectional causality from economic growth to construction activity; employment to economic growth and employment to construction growth.
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