Financial development and economic growth in India: some evidence from non-linear causality analysis

In the light of the recent observation that the relationship between financial development and economic growth is one of non-linear and limitations of granger test, this paper re-examined relationship in the framework of non-linear Granger causality employing (Diks and Panchenko in Stud Nonlinear Dyn Econ 9(2), 2006) test. The limitation of non-stationarity of earlier study is also addressed using the Toda and Yamamoto (J Econ 66:225–250, 1995) test. The present study attempts to undertake this exercise, as causal inference is sensitive to the twin limitations of non-stationarity and non-linearity. We used principal component analysis to construct index of financial development comprising alternative measures of financial development. The analysis has been carried out for the period 1990–2010. The results of Toda–Yamamoto and Diks–Panchenko tests reveal that financial development and economic growth bear no causal relationship, a finding contrary to the findings of several of the existing studies in the Grangerian framework.     

Dynamics of governance,gross capital formation,and growth: Evidence from Brazil,Russia, India,China, and South Africa

This study investigates the impact of governance index and gross fixed capital formation on the economic growth of Brazil, Russia, India, China and South Africa (BRICS) using annual data from 2002 to 2019. This study employs Fixed Effect Model, Driscoll and Kraay standard error with fixed effect, Fully Modified Ordinary Least Square, Dynamic Ordinary Least Square (DOLS) and Panel Dumitrescu Hurlin Causality test. The study has divided the variables into two models where model I includes the impact of governance index (jointly) on economic growth while model II examines the impact of governance index on economic growth individually. The findings demonstrate that the governance index, gross fixed capital formation, population, control of corruption, and governance effectiveness have a positive and significant impact on economic growth, whereas regulatory quality showed a significant and negative impact on economic growth. Furthermore, regarding the Panel test, we notice the presence of unidirectional causality among the constituent variables. Therefore, this study suggests that the government should encourage economic development in the BRICS countries and move away from outdated ideas and poor institutional quality in favor of a new comprehensive reform to achieve excellent governance, population growth control, labor law changes, and corruption control.