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Some Methodological Aspects of Rates of Growth Computations

Limitations and Alternatives

Amarjit Singh Sethi is Professor of Economics, Punjab School of Economics, Guru Nanak Dev University, Amritsar-143 005, India. Email: ajss_gndu{at}yahoo.com

Rates of growth in economic time series are one of the most commonly made computations in analytical programmes. Although exponential equation plays a pivotal role in estimating such rates of growth, there is a multiplicity of weak points associated with the usual methodology adopted for the purpose. The present note aims at highlighting some such limitations and points out avoidance of an indiscriminate use of the exponential equation. Depending upon the situation being faced with, the note outlines alternative approaches for estimating average annual rates of growth.

Key Words: JEL: C13 • JEL: C22 • JEL: H2 • Exponential Equation • Compound Growth Rate • Dummy Variables Technique • Trend-stationarity • Behavioural Growth Paths • Confluence Analysis • Causality Analysis

South Asia Economic Journal, Vol. 9, No. 1, 195-209 (2008)
DOI: 10.1177/139156140700900109


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