value means that the lnGDPt is out of its equilibrium value, which means it is above its equilibrium value, therefore, it must start falling in the next period to zero (equilibrium) value in order to correct the equilibrium error, hence the name error correction model. It is the absolute value of the coefficient of ECM variable that decides how quickly the equilibrium is restored, in this case the speed of adjustment is 0.4153 or 41.53% per period. GRANGER CAUSALITY As earlier stated increase in money supply (M2t) leads to reduction in interest rate, increase in investment and finally increase in GDPt. The following table represents the results of the Granger causality among the above variables. Table 6: Granger Causality Results S/no Direction of Causality Value Type of Causality 01 lnM2t lnGDPt 0.09114 Independence causality lnGDPt lnM2t 3.82014 Unidirectional causality 02 lnINVTt lnGDPt 1.47445 independence causality lnGDPt lnINVT 3.62014 Unidirectional causality 03 INRt lnGDPt 2.12137 Unidirectional causality lnGDPt INRt 0.78345 Independence causailty 04 lnINVTt lnM2t 0.90508 Independence causality lnM2t lnINVTt 1,82598 Unidirectional causality 05 INFt lnGDPt 2.12137 Unidirectional causality lnGDPt INFt 0.78345 Independence causality 06 INRt lnM2t 0.78089 Independence causality lnM2t INRt 0.28192 Independence causality 07 INFt lnM2t 0.89763 Independence causality lnM2t INFt 2.20892 Unidirectional causality 08 INRt lnINVTt 5.98280 Bilateral causality lnINVTt INRt 1.83473 Bilateral causality 09 INFt lnINVTt 0.13782 Independence causality lnINVTt INFt 0.46502 Independence causality 10 INFt INRt 5.06925 Bilateral causality INRt INFt 6.70717 Bilateral causality
value means that the lnGDPt is out of its equilibrium value, which means it is above its equilibrium value, therefore, it must start falling in the next period to zero (equilibrium) value in order to correct the equilibrium error, hence the name error correction model. It is the absolute value of the coefficient of ECM variable that decides how quickly the equilibrium is restored, in this case the speed of adjustment is 0.4153 or 41.53% per period. GRANGER CAUSALITY As earlier stated increase in money supply (M2t) leads to reduction in interest rate, increase in investment and finally increase in GDPt. The following table represents the results of the Granger causality among the above variables. Table 6: Granger Causality Results S/no Direction of Causality Value Type of Causality 01 lnM2t lnGDPt lnGDPt lnM2t 0.09114 3.82014 Independence causality Unidirectional causality 02 lnINVTt lnGDPt 1.47445 independence causality lnGDPt lnINVT 3.62014 Unidirectional causality 03 INRt lnGDPt lnGDPt INRt 2.12137 0.78345 Unidirectional causality Independence causailty 04 lnINVTt lnM2t lnM2t lnINVTt 0.90508 1,82598 Independence causality Unidirectional causality 05 INFt lnGDPt lnGDPt INFt 2.12137 0.78345 Unidirectional causality Independence causality 06 INRt lnM2t lnM2t INRt 0.78089 0.28192 Independence causality Independence causality 07 INFt lnM2t lnM2t INFt 0.89763 2.20892 Independence causality Unidirectional causality 08 INRt lnINVTt lnINVTt INRt 5.98280 1.83473 Bilateral causality Bilateral causality 09 INFt lnINVTt lnINVTt INFt 0.13782 0.46502 Independence causality Independence causality 10 INFt INRt INRt INFt 5.06925 6.70717 Bilateral causality Bilateral causality
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