Interest Rate and Economic Growth Linkages: An experience of the Indian Economy
Keywords:
Interest rate, Economic growth, FDIAbstract
According to many studies, many developing as well as developed economies have found a significant relationship between interest rate and economic growth. This paper studies the interaction between Interest rate and the Economic growth of Indian economy. We analyzed the related data connecting with other factors that might have an impact on the particular linkage such as FDI, Inflation, unemployment and National Income. This study is based on annual time series data for the period from 1980 to 2020. We incorporated the use of analytical model such as unit root test, cointegration test, vector error correction model and Granger’s Causality Test. The findings shows that Interest rate has a significant impact on economic growth during the time period. The economic growth in turn also affects the FDI inflow into the country.
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