Macro Economic Granger - Causal Dynamics in India: An Empirical Study Sreekanth D, Assistant Professor, Dr. Veni L. Krishna, Professor Siva Sivani Institute of Management, Kompally, Secunderabad, AP, India Online published on 13 March, 2014. Abstract The main objective of this study is to investigate the causal relation among the selected marco economic variables emerging of Indian economy during the period 1991–2012 using Johansen Cointegration and Granger Causality tests. This study has considered four macro-economic variables of India viz., GDP, PPP, Inflation and CAD. Initially the results of Augmented Dickey Fuller test shows that all the variables are stationary at 2nd difference and integrated at the same order. The results further prove the presence of long run relation among the selected variables as cointegration exists between them. Besides, the study proves that there is a unidirectional causality between GDP to PPP, GDP to Inflation, GDP to CAD, Inflation to PPP and PPP to CAD. The study concludes that GDP is the only macro economic variable which influenced the other variables considered for this study, therefore this study suggests that there is an immense need to accelerate the growth of GDP in India through effective macro economic policies. Top Keywords GDP, Purchasing Power Parity, Inflation, Current Account Deficit. Top |