Dynamic Interactions Between Real GDP and Macroeconomic Variables in Nepal

Dynamic Interactions Between Real GDP and Macroeconomic Variables in Nepal | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Dynamic Interactions Between Real GDP and Macroeconomic Variables in Nepal Anish Poudel, Sadish Giri This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7337124/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Nepal's economic growth is influenced by complex interactions among remittances, trade, investment, and GDP. Remittances are crucial for economic stability, but their weak link to profitable investment raises concerns about sustainable development. The export of low-value goods restricts trade opportunities, while imports create trade deficits. Investment, measured by gross fixed capital formation, faces obstacles from institutional barriers and inefficient policies. This study examines the dynamic relationships between real GDP, exports, imports, remittances, and GFCF using a Vector Autoregressive model with annual data from 1975 to 2023. The appropriateness of an unrestricted VAR model is verified through unit root and Johansen cointegration tests. Granger causality results show a unidirectional relationship from remittances to GDP, with exports being insensitive to GDP shocks, while investment and imports are positively influenced. Investment and remittances significantly contribute to the long-term fluctuations of GDP. These findings emphasise the vital role of remittances in Nepal's growth and recommend policies to channel remittance inflows into productive sectors, diversify exports, and enhance capital formation efficiency. Development Economics Remittances Economic Growth Exports and Imports Impulse Response Investment and Capital formation Vector Autoregressive Model (VAR) Full Text Additional Declarations The authors declare no competing interests. Supplementary Files aa.xlsx Data Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7337124","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":498223355,"identity":"eb076642-0445-46ad-9293-9bcc72b241a1","order_by":0,"name":"Anish Poudel","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABB0lEQVRIiWNgGAWjYFACxgZmMH2AufFBQoWEHJj9gDgtjM0GH87YGIPZCQTsgWlpk5zZlpbYAOLg08I/u7n5c+EOm8S+443NxjxnDqfPDzv8EGiLnZxuA3YtEncOtknPPJOWOPPMwcbHPBWHczfeTjMAakk2NjuAw5obiW3MvG2HEzfcSATbkrtxdgJIy4HEbTi0yANVfgZruf+wTRrISDecnf4BrxaDG4kN0hBbIN5PkJfOwW+LIdBh0rxn0oxnnkkEB7LhBumcggMJBrj9Incj/fFn3h02sn3HDx8ERaW8/Oz0zR8+VNjJ4fQ+CDA2IDsVrNIAj3IMLfINOFSNglEwCkbBiAUAf1dyOXWZ3EMAAAAASUVORK5CYII=","orcid":"https://orcid.org/0009-0006-0880-3790","institution":"Tri-Chandra Multiple Campus","correspondingAuthor":true,"prefix":"","firstName":"Anish","middleName":"","lastName":"Poudel","suffix":""},{"id":498223356,"identity":"959803c4-347a-4198-bb40-88d3b232ae4e","order_by":1,"name":"Sadish Giri","email":"","orcid":"","institution":"Dronacharya Degree College","correspondingAuthor":false,"prefix":"","firstName":"Sadish","middleName":"","lastName":"Giri","suffix":""}],"badges":[],"createdAt":"2025-08-10 06:33:27","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7337124/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7337124/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":88858057,"identity":"5efd637b-073a-4a87-bdfc-0ac3fd8fe0b0","added_by":"auto","created_at":"2025-08-12 07:11:37","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":448400,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7337124/v1_covered_8dbbd2b9-0280-4476-bcab-23399d723c0f.pdf"},{"id":88857311,"identity":"3dc77bfd-6a3d-45e7-9be3-cadb2ebca02d","added_by":"auto","created_at":"2025-08-12 06:55:36","extension":"xlsx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":22749,"visible":true,"origin":"","legend":"\u003cp\u003eData\u003c/p\u003e","description":"","filename":"aa.xlsx","url":"https://assets-eu.researchsquare.com/files/rs-7337124/v1/f5febe0223d33c5a57ea7b74.xlsx"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003e\u003cstrong\u003eDynamic Interactions Between Real GDP and Macroeconomic Variables in Nepal\u003c/strong\u003e\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Tri-Chandra Multiple Campus","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Remittances, Economic Growth, Exports and Imports, Impulse Response, Investment and Capital formation, Vector Autoregressive Model (VAR)","lastPublishedDoi":"10.21203/rs.3.rs-7337124/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7337124/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eNepal's economic growth is influenced by complex interactions among remittances, trade, investment, and GDP. 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