Title: Impact of four components of money supply on GDP growth using ARDL: evidence from India

Authors: C. Karthikeyan; R. Murugesan

Addresses: Department of Humanities and Social Sciences, NIT Tiruchirappalli, India ' Department of Humanities and Social Sciences, NIT Tiruchirappalli, India

Abstract: This study investigates the relationship between the money supply components demand deposits, time deposits, other deposits with RBI and currency in circulation each expressed as a percentage of GDP, inflation and nominal GDP growth. Granger causality test and ARDL bounds test are used to investigate this relationship. These money supply variables have an impact on nominal GDP growth in the long run. A change in inflation seems to be the major determinant of change in nominal GDP growth in the long run. This study also finds a bidirectional relationship between change in currency in circulation to GDP ratio and change in nominal GDP growth.

Keywords: auto regressive distributed lag; ARDL; gross domestic product growth; GDP growth; money supply; granger causality; India.

DOI: 10.1504/IJPSPM.2021.117713

International Journal of Public Sector Performance Management, 2021 Vol.8 No.1/2, pp.37 - 53

Received: 20 Feb 2019
Accepted: 11 Aug 2019
Published online: 22 Sep 2021 *

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