Open AccessRelationship between Macroeconomic Policy and Long-Run Economic Growth of Nepal
Author(s) -
Mohan Khanal
Publication year - 2021
Publication title -
quest journal of management and social sciences
Language(s) - English
Resource type - Journals
eISSN - 2705-4535
pISSN - 2705-4527
DOI - 10.3126/qjmss.v3i2.41584
Subject(s) - cointegration , economics , openness to experience , error correction model , short run , gross fixed capital formation , variable (mathematics) , econometrics , investment (military) , macroeconomics , monetary economics , gross domestic product , mathematics , psychology , social psychology , mathematical analysis , politics , political science , law
Background: The paper is an attempt to find the long-run relationship between macroeconomic variables and economic growth in Nepal. The variables in the study are run across the Cobb-Douglas production model.
Objective: This paper examines the relationship between Gross Fixed Capital Formation, Population, Trade openness, Money Supply and GDP growth economic growth in Nepal.
Method: The ARDL bound test and Error Correction model incorporated in the study to examine the long-run relationship among macroeconomic variables.
Conclusion: Based on the Bound Test of F-statistics the Cointegration Result exists among the variable and ARDL (1,1,1,1,1) relation is estimated.
Implications: Since the study has found the existence of a cointegration relationship on the variables of the study and the long-term relationship among economic growth is significant with GFCF. The policy should be targeted at investment growth in Nepal.