Dynamic Nexus between Economic Growth and Total Reserve and Aggregate Consumption Expenditure: An ARDL Approach

Abstract

This paper tries to see the association among reserve, aggregate consumption expenditure, and economic growth by employing the autoregressive distributed lag (ARDL) model. Both the explanatory variables such as consumption and reserve are statistically significant. The consumption expenditure is strongly affecting the economic growth both in the short and long-term. Performing the ADF and PP test the variables are integrated order of one I(1). The bound test confirmed that the long-term association exists between the variables. There ¬is a unidirectional association found among the variables.