The paper investigates the finance-growth nexus in India in a trivariate framework by incorporating inflation. It finds that financial development has substantial impact on both economic growth and inflation. While financial development and economic growth are bidirectional, financial development and inflation are unidirectional. The paper finally suggests that financial development is considered as a policy variable to forecast economic growth and inflation in India, especially in the globalization era of 1990s. That means the proper linkage between the three will ensure macroeconomic stability in the Indian economy. [ABSTRACT FROM AUTHOR]
Published
2011
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