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Volume : IV, Issue : I, February - 2014 STUDY OF CASUALTY IN THE STRUCTURE OF INDIA'S BALANCE OF PAYMENT Bunny Singh Bhatia, Brijesh Yadav By : Laxmi Book Publication Abstract : The present paper intends to analyze the short run and long run causality between current account and capital account in a very comprehensive manner. We have conducted Wald test, Granger casualty test, Vector error correction model and Johansen co integration test to find out long run and short run causality and its direction between current account and capital account. Our empirical analysis is
based on annual data on current account balance and gross foreign capital inflows, for the period 1990- 2012. The direction of causality will help us to find out the policy framework to improve and manage India's Balance of payment position. There is short run bidirectional causality between capital account and current account. Granger causality and vector error correction model suggest that in the long run current account encourages and causes capital account. These papers suggest policy to manage balance of payment should focus on managing current account via domestic expenditure. Keywords : Unable to cast object of type 'System.DBNull' to type 'System.String'.
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