Assessing the Impact of Exports, Imports, and Gross Fixed Capital Formation on Nepal's Economic Growth: an Ardl Approach

Abstract The Auto-Regressive Distributed Lag (ARDL) method is used in this study to examine the effects of imports, exports, and gross fixed capital formation (GFCF) on Nepal's economic growth. This time series analysis evaluates the long- and short-term relationships between these macroeconomic variables using the ARDL approach. The findings show that while lagged exports harm GDP, exports have a favourable long-term impact on GDP. The error correction model captures the short-run dynamics well. The robustness of the model is confirmed by diagnostic tests, revealing no specification errors, serial correlation, or heteroscedasticity. Stability tests, such as CUSUM and CUSUMSQ, confirm the stability of the model's coefficients over time. These findings provide vital economic development and macroeconomic policy insights, indicating that optimizing capital investments, imports, and exports can significantly boost Nepal's economic growth. JEL Classification: C22, O11, C32, E60, E22