Time Series Behaviour of the Bse

Time Series behaviour of BOT in India: Evidence from Co integration Analysis and Error Correction Model xxxxxxxxxxxxxxxx Assistant Professor, Department of Business Administration,
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West Bengal University of technology
Kolkata, India
Tel: [phone] E-mail: [e-mail]

Abstract

India, a developing economy contains trade deficit from its very inception. The main objective of the study is to portray some characteristics of India’s trade in pre liberalization (1951-1991) and post liberalization (1991-2008) period walk in total export and import time series. Author attempt to understand the time series behavior of total export and import of India. Unit root tests recognize the existence of random walk. Johansen co integration test reveals long-run equilibrium relationship between these two variables. Getting the existence of co integration, the study attempts to find a causal relationship by using error correction mechanism. Additionally Unit root test is employed to examine the existence of stationarity in the given time series. Ultimate Test results expose bidirectional long term causality and unidirectional short term causality between imports - exports of India. Findings of the study corroborate that India is unable to violate of its international budget constraints.
Keywords: Stationary, Co integration, Export, Import, Causality, ECM estimation
JEL Classification: G1, G3

1.0 Introduction

International trade is the basic activity by which a country establishes its economic relationship with other countries. At present, liberalization of trade is a common phenomenon for most countries. Liberalization of trade policy significantly came into being in India from 1991. Whatever is the concentration for liberalization, all the countries put extensive concern for gaining trade balance. A country’s trade volume reflects the collective effects of other macroeconomic policies. To investigate collective effect of many

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