Data
Period: 1979 to 2023
Target Variable
Gross Fixed Capital Formation (GFCF) is the total investment in fixed assets within an economy over a given period. It includes capital goods like machinery, equipment, and buildings.
- It measures the growth potential of an economy as higher GFCF indicates increased productive capacity
- Variable: Public and Private investments
- Data used: HBS Table No. 02 _ Macro Economic Aggregates (at Constant Prices)
Explanatory Variables
Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a country’s borders in a given period.
- It is considered the most comprehensive measure of a country’s economic activity and is widely used to gauge its overall economic health and performance.
- Variable: Growth
- Data used: HBS Table No. 02 _ Macro Economic Aggregates (at Constant Prices)
Call Money Rate is the interest rate charged by commercial banks to other banks for short-term loans, typically overnight.
- It’s a key indicator of liquidity in the money market. A high call money rate suggests tight liquidity, while a low rate indicates ample liquidity.
- Variable: Interest Rates
- Data used: HBS Table No. 62 _ Structure of Interest Rates
Market Capitalization is the total market value of a company’s outstanding shares of stock. It is calculated by multiplying the number of shares by the current market price per share.
- It reflects the overall value of a company and is often used to assess its size and financial health.
- Variable: Share Prices
- Data used: HBS Table No. 91 _ Annual Averages of Share Price Indices and Market Capitalisation
Consumer Price Index (CPI) is a measure of the average change in prices paid by consumers for a basket of goods and services over time.
- It is used to track inflation, which is the sustained increase in the general price level of goods and services in an economy.
- Variable: Inflation
- Data used: HBS Table No. 37 _ Consumer Price Index - Annual Average (Indexed to: Base Year 1960)
About the Data
- The research period is from 1979 to 2023 (because of data availability)
- Currencies are at constant prices (INR crores.)
- The base Year was set to 2011-12 for all Indices (as GDP data was adjusted according to this base year)
Methodology
- Since there is high multicollinearity in the data and this is a time series data, we know that there is a very significant effect of trending here.
- Suggestion was to use the first difference of the data to eliminate the trend and unit root test
Modelling Indian Investments
Data Period: 1979 to 2023
Target Variable
Gross Fixed Capital Formation (GFCF) is the total investment in fixed assets within an economy over a given period. It includes capital goods like machinery, equipment, and buildings.
- It measures the growth potential of an economy as higher GFCF indicates increased productive capacity
- Variable: Public and Private investments
- Data used: HBS Table No. 02 _ Macro Economic Aggregates (at Constant Prices)
Explanatory Variables
Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a country’s borders in a given period.
- It is considered the most comprehensive measure of a country’s economic activity and is widely used to gauge its overall economic health and performance.
- Variable: Growth
- Data used: HBS Table No. 02 _ Macro Economic Aggregates (at Constant Prices)
Call Money Rate is the interest rate charged by commercial banks to other banks for short-term loans, typically overnight.
- It’s a key indicator of liquidity in the money market. A high call money rate suggests tight liquidity, while a low rate indicates ample liquidity.
- Variable: Interest Rates
- Data used: HBS Table No. 62 _ Structure of Interest Rates
Market Capitalization is the total market value of a company’s outstanding shares of stock. It is calculated by multiplying the number of shares by the current market price per share.
- It reflects the overall value of a company and is often used to assess its size and financial health.
- Variable: Share Prices
- Data used: HBS Table No. 91 _ Annual Averages of Share Price Indices and Market Capitalisation
Consumer Price Index (CPI) is a measure of the average change in prices paid by consumers for a basket of goods and services over time.
- It is used to track inflation, which is the sustained increase in the general price level of goods and services in an economy.
- Variable: Inflation
- Data used: HBS Table No. 37 _ Consumer Price Index - Annual Average (Indexed to: Base Year 1960)
About the Data
- The research period is from 1979 to 2023 (because of data availability)
- Currencies are at constant prices (INR crores.)
- The base Year was set to 2011-12 for all Indices (as GDP data was adjusted according to this base year)