INDIA TRADE BALANCE IN THE 1980S - AN ECONOMETRIC-ANALYSIS

The paper is an examination of India's trade balance in the 1980s. The approach attempted is of examining the bilateral trade balances of In dia with nine trading partners from the non-communist bloc. The long-r un equilibrium relations are studied via two VAR models in Johansen's multivariate cointegration framework. Five hypotheses of interest are singled out for attention. The nominal and real exchange rates consist ently emerge as important influences on the trade balance. However, as the exchange rates fail weak exogeneity tests, policy implications ar e not clear cut.