Abstract
This study aims at exploring the determinants of GDP fluctuations using macro panel approach in a panel of five selected South Asian countries (SSAC) including Bangladesh, India, Nepal, Pakistan and Sri Lanka over the period of 1980-2010. For this purpose, modern non-stationary panel techniques such as cross section dependence test, unit root test under cross sectional dependence, panel co-integration and Group Mean Fully Modified OLS (GM-FMOLS) estimation are applied.The results of the Group Mean FMOLS estimates show that aid dependence (AIDGDP), trade openness (OPEN), volatility in the price level (PRIVOL), reliance on agriculture (AGRGDP) and political stability (POLSTB) are the significant determinants of the GDP fluctuations. Thus, it is suggested that these determinants may be managed to reduce the volatility in GDP growth rate.
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