Title: The Variance Decomposition of GDP, Domestic Credit and Exports of Nepal: A VAR Approach
Abstract: The economic development is the main objective of the nation and variation of which due to shock or innovation in different economic variables throws insight vision to the policy makers and economists. This paper uses Nepal's annual data of economic growth, domestic credit and exports to other countries from 1975 to 2014. The primary focus of the paper is to examine the relationships between the variables under consideration employing vector autoregressive model and variance decomposition to abstract short run and the long run association among the variables. Results show that the influence of the shock or innovation of domestic credit to economic growth is almost doubled in the long run as compared to that of short run. The shocks of other variables remained almost same in the short run and long run. So, it may be suitable measure to increase domestic credit instead of other measures to accelerate the economic growth of the nation.
Publication Year: 2015
Publication Date: 2015-07-01
Language: en
Type: preprint
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Cited By Count: 2
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