Abstract
The study estimates the short-run as well as long-run macroeconomic determinants of country’s economic growth by applying time series analysis. The Johansen and Juselius multivariate co-integration test and the vector error correction (VEC) model are used to analyze the annual data from 1980-81 to 2010-11. The empirical findings confirm that there is a stable long-run relationship between India’s gross domestic product (GDP) and its determinants. The result suggests that gross domestic capital formation, employment, export, foreign direct investment and money supply have positive effect on India’s GDP growth where as inflation and fiscal deficit have negative effect. In the short-run, GDP is significantly influenced by country’s gross domestic capital formation. The error correction term is negative and significant. Further generalized variance decomposition assures the prudent impact of export and capital formation on GDP in
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