Nexus between economic growth, external debt, oil price, and remittances in India: New insight from novel DARDL simulations

Abstract

This study aims to give empirical insights into how the linkages between external debt, crude oil price, and personal remittances affect economic growth in India. This research stands out from the rest because it makes use of the newly established unique dynamic autoregressive distributed lag (DARDL) simulations framework to evaluate long- and short-run cointegration among chosen variables, as well as the impact of negative and positive changes in the regressor on the regressand using annual data from 1990 to 2020. For India, the key findings are as follows: (i) external debt contributes to lower economic growth in the long run as well as the short run; (ii) oil price influences economic growth positively in both the long and short run, and (iii) personal remittance negatively affect economic growth in the long run. Considering empirical facts, this article proposes that the Indian government and policymakers formulate policies that could reduce external debt and improve the nation's economy to reap the potential gain from remittances, which might spur economic development.