Relationship between Macroeconomic Policy and Long-Run Economic Growth of Nepal

Authors

DOI:

https://doi.org/10.3126/qjmss.v3i2.41584

Keywords:

Cointegration, Autoregressive Distributed Lag (ARDL), Vector Error Correction (VEC)

Abstract

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.

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Published

2021-12-25

How to Cite

Khanal, M. (2021). Relationship between Macroeconomic Policy and Long-Run Economic Growth of Nepal. Quest Journal of Management and Social Sciences, 3(2), 265–276. https://doi.org/10.3126/qjmss.v3i2.41584

Issue

Vol. 3 No. 2 (2021)

Section

Research Papers

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Copyright (c) 2021 Quest Journal of Management and Social Sciences

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