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The World Trade Organization’s (WTO) policy of free and fair trade has led to persistent decline in the average world trade tariff rates. It also ensured prior ratification of non-tariff measures implemented by countries. At the same time, countries across the world have introduced trade facilitation measures to ensure smooth flow of goods across borders. Despite these, countries still face substantial trade barriers. Against this backdrop, using data from India, the present paper aims at analyzing the impact of trade barriers on its exports by calculating a bilateral trade restrictiveness index based on tariff, non-tariff and border administrative and regulatory measures. The results show that trade restrictions faced by a country depend on its export basket composition, specific export products and its export destinations and hence are unique to each country. They confirm the existence of substantial trade barriers for a country, as against the general perception that trade restrictions have declined over the years. [ABSTRACT FROM AUTHOR]

At the root of the second wake of export pessimism is the argument that exportled growth (ELG) models suffer from a fallacy of composition. Under constrained global demand, all exporting nations cannot simultaneously pursue ELGs, and the ensuing battle for markets would eventually cause more competitive exporters to drive out or displace less competitive ones. Considering how the Indian economy has witnessed a deceleration in her export of services since the mid-2000s, this paper enquires whether similar export-displacements could have lent to this status quo. Using bilateral service trade data for the years 2005-2015, the paper tests the displacement or crowding out of India’s export of services to advanced OECD nations by exports from other developing and emerging market economies. Our results show the remarkable presence of complementarity between service exports from India and that from other exporting powerhouses like China, Singapore and Vietnam, though the country appears to have been losing markets for her prime services to certain emerging exporters. [ABSTRACT FROM AUTHOR]

The impact of embedded location options on Indian agricultural commodity futures returns has not been investigated systematically, despite the available anecdotal evidence suggestive of significant impact. Any significant impact on futures returns translates directly to an impact on hedging effectiveness of the futures. This paper investigates whether the addition of a return term due to the location option helps in explaining futures returns better relative to cash market and storage returns alone for the Chana contract when using regression analysis. Relative importance analysis is used to assess the relative contributions of regressors, and regression coefficients are tested for significance. It is found that the adjusted coefficient of determination improves significantly on adding location option returns as a regressor, and its regression coefficient is significant for the majority of the contracts studied. Relative importance analysis of the regressors shows that location option, on average, accounts for 28% of the explained variability of excess futures. These results suggest that location option impacts futures prices and returns significantly and is a key reason for the poor hedging effectiveness of Indian agricultural commodity futures. These results guide exchanges, regulators and policymakers to reduce the impact of embedded location options by optimizing contract delivery specifications to make futures contracts more useful to hedgers such as farmer producer organizations. [ABSTRACT FROM AUTHOR]

Supply chain operations and the use of energy are inextricably interwoven. The supply chains, especially those operating in the food sector, which experience high competition, high implied demand uncertainty, low profit margin etc., are trying very hard to minimize their operational costs to become efficient in the marketplace. On the contrary, inflation has been one of the key issues in food supply chain operations. Irrespective of whether the food product is need-based or demand-based, inflation of essential commodities is experienced by consumers throughout the year. This paper examines how energy price fluctuations have impacted food supply chain prices in India. The time series data of energy and food resources have been modeled and validated using Machine Learning (ML)-based SARIMAX algorithm to find that High-Speed Diesel (HSD) impacts food inflation the most, keeping aside coal. In push-need-based food supply chains, the impact of HSD is relatively higher than in push-demand-based food supply chains. [ABSTRACT FROM AUTHOR]

India has formally adopted inflation targeting framework for conduct of monetary policy since 2016. Under this framework conduct of monetary policy heavily relies on inflation projection, and hence success and effectiveness of conduct of monetary policy is critically dependent on the understanding of the inflation dynamics. Drawing from the Stock and Watson (2007) atheoretical approach to understanding inflation dynamics, Gopinath et al. (2021) have found that trend inflation adequately explains the movements of inflation in India. In this paper, an attempt is made to understand what influences movements in trend inflation. The evidence presented supports a statistically and economically significant role for inflation expectations in explaining movements in trend inflation in India, be it headlines, core and food component. There is no evidence of any role for the output gap or slack (in levels) in explaining movements in trend inflation, partly reflecting data challenges associated with the estimation of slack. It is argued that there is merit in according significance to inflation expectations in monetary policy formulations by the Reserve Bank of India. It is also argued that monetary policy action has to respond suitably to the changes in inflation expectations, as the latter is found to be important to shape the inflation dynamics in India. [ABSTRACT FROM AUTHOR]

Monetary policy has been formulated with the purpose of achieving the twin objectives of economic growth and price stability through the successful working of the transmission mechanism. Monetary policy-induced changes in the nominal variables are expected to impact the real economic indicators like GDP and inflation. The evolution of Reserve Bank of India's (RBI) monetary policy has been divided into four distinct frameworks: pre-monetary targeting, monetary targeting, multiple indicator approach and eventually an inflation-targeting framework since 2015. RBI's monetary policy strategies have undergone substantial transformation in the last 70 years. The success of each monetary policy framework can be assessed by comparing the impact of monetary policy changes on various economic performance indicators. The purpose of this paper is to compare the performance of economic indicators under different monetary policy frameworks in the postindependence period. The economic performance indicators used in the study are inflation and output gap. Analyzing the monthly data from April 1982 to March 2017, the study finds that the multiple-indicator and the inflation-targeting regimes have had most success in balancing the twin objectives of growth and inflation. [ABSTRACT FROM AUTHOR]

India's youth unemployment rose from 15.5% in 1991 to 23% in 2019. This period also witnessed a declining trend in India's youth to working-age population ratio from 33% to 27%. These statistics are aligned with the existing studies which postulate that if the working-age segment has a large proportion of youth in the age group of 15 to 24 years, it will lead to a high unemployment rate. Given such a context, this paper aims to examine and estimate the demographic, monetary and macroeconomic factors influencing India's rising youth unemployment, with the help of Autoregressive Distributed Lag (ARDL) approach to cointegration. This study also brings in a new dimension to the existing studies by providing an in-depth analysis of the role of millennials cohort, which entered the working-age segment in 1995, in contributing to India's rising youth unemployment. A disaggregated analysis of India's youth unemployment based on the criteria of education and gender has also been carried out. [ABSTRACT FROM AUTHOR]

India has been facing the problem of continuing depreciation of its currency against US Dollar over the past few decades. Related existing literatures have identified some factors that may have contributed to this phenomenon. The current paper determines the relative importance of each factor towards currency depreciation in India by means of quantile regression analyses. Our analyses suggest that India's increasing Current Account Deficit (CAD), oil and gold imports, and changes in domestic prices relative to world prices (considered to be an indicator of inflation) are the most significant contributors towards depreciating Indian currency. However, the effects of these factors vary across the distribution of exchange rate. [ABSTRACT FROM AUTHOR]

Hydroelectricity is one of the most important sources of renewable power, making it an integral part of emissionless power generation plan for many developing economies, including India. But hydropower firms based on rain-fed rivers in Indian plains and plateaus are highly monsoon-dependent for their generation. The primary objective of this study is to explore the intensity of the risk of fluctuating monsoon rain and securitization of that risk through financial instruments for Indian hydroelectricity sector. The paper analyzes the applicability and efficiency of a designed monsoon derivative in mitigating the monsoon risk of a representative hydroelectricity firm, namely, Damodar Valley Corporation (DVC). The study suggests the use of a weather option contract based on the accumulated monsoon rainfall of the river basin in mitigating the risk. The parameters of such an instrument are estimated and a pricing mechanism is suggested through fitting parametric distribution to the rain data and using a Gaussian copula to capture the interdependencies of rainfall in various locations of the catchment area of the river basin during the monsoon season. The study reveals that the firm can successfully hedge the rainfall risk through financial derivatives and attain a superior position vis-à-vis risk-return. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of monetary policy stance on trade and foreign investment in the pharmaceutical sector in India. It employs the Bayesian Vector Autoregression (BVAR) approach to construct a model and then studies the said impact by the Impulse Response Function (IRF) analysis. In a Bayesian procedure, the parameters are treated as random variables and their posterior distribution is estimated via the imposition of prior beliefs on their distribution, which makes the analysis more robust when combined with Vector Autoregression (VAR). It has been found that both FDI inflows and exports are impacted by inflation and interest rate changes; however, inflationary pressure has a pronounced impact. On the other hand, GDP growth does not seem to substantially impact both FDI inflows and exports as deduced from the Bayesian VAR with Stochastic Volatility and Time Varying Parameters (BVARSV-TVP) model. These findings have been deduced alongside a benchmark VAR model. [ABSTRACT FROM AUTHOR]

India is a federal country with asymmetric levels of development. The asymmetries are both vertical and horizontal in nature. This paper proceeds in two stages--in the first stage, it decomposes the level and pattern of fiscal dependency of states on the different components of total transfers. In the second stage, it examines the factors that influence the allocation of conditional/discretionary central transfers to the states. The study finds that successive Finance Commissions have gradually enhanced the share of states in the centralized divisible pool over a period of time. It is evident from the overall empirical outcome that states with a larger fiscal space and Gross State Domestic Product (GSDP) growth were able to get more funds as compared to the prevailing political factors during the first and third sub-periods. In all the three sub-periods, interactive dummies have played a significant role in determining the allocation of federal funds to the states. [ABSTRACT FROM AUTHOR]

The interest rate transmission mechanism of monetary policy to real economic activity has been the center of interest of many researchers globally. The aim of this paper is to study the impact of the policy interest rate (both nominal and real interest rates) on the output gap in India for the period from May 2001 to March 2015 using monthly data, and explore whether the Reserve Bank's switching to inflation targeting has hampered the growth objective. The paper uses Autoregressive Distributed Lag (ARDL) cointegration approach to study the long-run and shortrun dynamics of the objective variables. It takes sufficient number of lags to handle the problem of endogeneity mostly present amongst macroeconomic variables. The study finds presence of interest rate puzzle, where the conventional negative relationship between output and interest rate is broken. It suggests the presence of some other factors such as business mood, investment uncertainty, presence of parallel economy or the time period which was dominated by global financial crisis and its aftermath as the possible reasons for the decline in growth rate. [ABSTRACT FROM AUTHOR]

This paper assesses the technical efficiency and efficiency differences in elementary education system across Indian states by using Data Envelopment Analysis (DEA) and regression model. It considers different educational outcome variables such as enrolment rate in primary schools and upper primary schools, and completion rate in primary schools and upper primary schools for the period 2007-08. The model also includes several inputs hypothesized to impact the output, such as percentage of habitants with access to primary school within 1 km distance and upper primary school within 3-5 km, and percentage of full-time teachers in primary and upper primary schools. Using DEA, the paper is able to separate states that might qualify as performing well from those where some improvement might be possible in terms of efficiency. This could imply a better allocation by the states with usually scarce resources available for elementary education in India. Results show that Delhi, Kerala, Tamil Nadu and Nagaland with relatively high achievement values in education sector are also operating at the efficient frontier. On the other hand, Bihar, Madhya Pradesh, Odisha and Uttar Pradesh have low outcomes, but the problem with these states is that given their current input levels, there is limited scope for improving their outcomes and catching up with the better-off states. It is argued here that adequate inputs need to be made available for such states either by generating and investing more in education sector by the states or by better usage of the existing centrally-sponsored schemes. The study also makes an attempt to identify the determinants of efficiency by using simple regression model. [ABSTRACT FROM AUTHOR]

The inflows of foreign capital into India have been a mixed blessing for the economy. Capital inflows have been associated with increased investment and rising Gross Domestic Product (GDP). The main focus of the paper lies in analyzing the behavior of the macroeconomic indicators in relation to the inflows of foreign capital and exchange rates in India since 1991, the year in which several major reform programs were initiated. It analyzes the trends in inflows of foreign capital into India and variations in exchange rate of the Indian rupee and their mutual interdependence over the period 1990-91 to 2007-08. It shows the correlation between exchange rate and inflows of capital in India, and also between the exchange rate and some macroeconomic indicators such as GDP and money supply. Further, it also shows the relationship of nominal effective exchange rate (both trade-based and export-based) with foreign direct investment and foreign portfolio investment in India. The correlation analysis of selected indicators shows that GDP is strongly related to the exchange rates of Indian rupee per unit of US dollar, pound sterling and SDR. This suggests that the prevailing exchange rates helped in the growth of Indian GDP. It also focuses on the effects of inflows of foreign capital on some macroeconomic variables in India. This paper also studies how the Reserve Bank of India prevents the exchange rate appreciation associated with rising capital inflows by accumulating foreign exchange reserves and foreign investments. [ABSTRACT FROM AUTHOR]

The present paper examines the performances of equity and debt-oriented mutual fund schemes covering the period from 2015 to 2019, concurrent to the implementation of demonetization and GST in India. A total of eight schemes, with four each from the equity and debt funds, of SBI and HDFC Asset Management Companies (AMCs), have been considered in the present study. Based on the risk-adjusted performance analyses, particularly the Treynor ratio, the selected debt schemes of HDFC Mutual Fund have outperformed the debt schemes of SBI Mutual Fund. [ABSTRACT FROM AUTHOR]

Using monthly data on money, short-term credit, foreign exchange, government securities, long-term debt, futures, and real estate market instruments' returns, the paper examines the financial-markets' integration (i.e., long-term relationship or cointegration) within and across the markets in India for the sample period April 2006 to March 2020 by employing the autoregressive distributed lag methodology. In terms of within the markets, the study found that there exists financial integration only in money, short-term, government and forex markets. On the other hand, in terms of across the markets, it is found that all the money market and short-term credit market instruments other than IMF lending rate and bank rate are cointegrated with government securities, long-term debt, futures, foreign exchange and real estate markets. Equity market is cointegrated only with money, short-term credit and futures markets. Similarly, 10-year government security is cointegrated with money, shortterm credit and forex markets. The equity futures market is cointegrated with money, short-term credit and long-term debt markets only, while the corporate bond market is cointegrated with all the markets other than futures. On the other hand, neither the commodity futures market nor the real-estate market is cointegrated with any other markets. The equilibrium adjustment speed is not uniform across the markets and in general it is lower within the markets compared to across the markets. [ABSTRACT FROM AUTHOR]

The identification of external and internal determinants of inflation is a perplexing task. Moreover, the spillover impact of these determinants generates indecisiveness in measurement. Therefore, the present paper tries to identify the impact of external and internal determinants of inflation in India by using the time series data from 1978 to 2015. In order to assess the short-run and long-run impact of selected variables, an Autoregressive Distributed Lag (ARDL) bounds approach has been adopted. The ARDL bounds method allows investigating the impact of external and internal determinants on inflation in India and provides long-run stability in the system. The results of the study found that oil consumption has a direct impact on domestic prices. Similarly, due to the increase in employment, inflation tends to increase in the long run. Further, the relationship between deficit financing and the domestic price is found to be negative and significant, whereas the impact of Foreign Direct Investment (FDI) on domestic price is found to be inconclusive in the long run. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to estimate the effectiveness of technical trading strategies and examine the extent to which trading profitability using technical analysis indicators explains the 'risk premium' or 'risk compensation' for investing in equity markets as against assets that are relatively risk-free using multiple regression analysis. The technical indicators selected for the analysis are Bollinger bands (volatility indicator), moving average (trend indicator), Relative Strength Index (momentum indicator), and Elliot wave theory (mass psychology indicator). The paper finds evidence for risk premium being explained by technical indicators. The technical trading strategy based on trend, momentum, volatility indicators, including the Elliot wave theory has the ability to explain the excess return of a stock. The findings have important implications for traders and practitioners. A positive relationship implies that technical indicators can be explored while evaluating strategies for investment. So, it suggests that traders, retail investors and fund managers, while evaluating portfolios, can rely on technical indicators-based trading strategies other than fundamental analysis. [ABSTRACT FROM AUTHOR]

Weather-based financial instruments have gained huge popularity in the recent past for hedging weather or climate-related risk across sectors in many economies. Among developing countries, India was one of the pioneers to apply the concept of weather hedging through financial instruments in agriculture. However, although advocated by many, India is yet to explore the use and efficiency of similar instruments in any other sector, including power, whose financial performance is also highly exposed to weather fluctuations. This paper aims to assess the efficiency of temperature derivative at micro level from the perspective of an Indian power distributor. The responsiveness of power demand towards temperature fluctuation is estimated and a suitable temperature derivative product is developed for mitigation purpose. This instrument is priced using discrete time series modeling of daily temperature incorporating a trend in the mean, a lower order Fourier series with autoregressive (AR) component in the presence of Generalized Autoregressive Conditional Heteroskedasticity (GARCH). The efficiency of the instrument is judged through simulating the performance of the power trader with and without the weather derivative. The study reveals that even under current semi-administrative pricing structure that exists in Indian power sector, the volumetric risk arising from temperature fluctuation can be successfully hedged using weather derivative. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between BSE Sensex and three other developed markets in the frequency domain. Cross-spectral methods, which are important in discovering and interpreting the relationships between economic variables, are used to analyze the relationships between different price series. Cross-spectral methods, developed using Fourier techniques, give valuable information regarding the correlation structure in the frequency domain. This paper applies these methods to study the lead-lag relationship between BSE Sensex and other international markets. The results show no significant co-movement of Indian stock prices with developed market prices at lower frequencies; and in the long run, the developed stock markets seem to lead Indian market. However, in the short run, some evidence of behavioral similarities is observed. [ABSTRACT FROM AUTHOR]

This paper examines the volatility pattern in Indian stock markets during the time period January 1, 2011 to March 31, 2014 using the daily closing prices of two stock indices, S&P BSE Sensex and CNX Nifty. This paper uses asymmetric GARCH models like Exponential GARCH (EGARCH) and Threshold GARCH (TGARCH) to explain the volatility. Considering the minimum values of Akaike Information Criterion (AIC) and Bayesian Information Criterion (BIC), TGARCH model is found to be a superior model for return volatility over EGARCH. The findings suggest that there is no volatility persistence as well as leverage effect in the data during the period under consideration. [ABSTRACT FROM AUTHOR]

This paper tries to trace the relationship between finance and growth. There are several indicators which represent the degree of financial intermediation such as M3, Real Rate of Interest (RR) and economic growth. In this paper, we have used Time-series methodology such as Unit Root (ADF and Phillips-Perron Tests), Cointegration (developed by Johansen and Juselius), and Granger Pairwise causality. We have checked the presence of unit roots in the data, and all the three variables-Financial Development, RR and Growth Rate-are found to be integrated at first difference. Secondly, Johansen cointegration test results confirm the presence of long-run equilibrium relationship among the variables. Finally, the Granger causality supports the hypothesis of 'Finance-led Growth' indicating that the finance is a leading sector in India and is poised for development. This result supports the supply-leading hypothesis for Indian economy for the sample period. These findings have important implications for the conduct of economic policies in India. [ABSTRACT FROM AUTHOR]

Financial inclusion is the availability and equality of opportunities to access financial services to the economically disadvantaged groups. In India, the Reserve Bank of India (RBI) and the government have undertaken various measures and introduced several schemes for financial inclusivity, including the setting up of a new category of bank called the payments bank in 2014. Payments banks aim to provide services to the unbanked, mainly for the migrant workers and those from lower income households. This paper tries to study the reasons behind the need for payments banks and the challenges to payments banks with regard to financial inclusivity in India, and accordingly proposes a framework for payments banks to ensure financial inclusion more effectively in India. For this purpose, variables or factors for 'Drivers of payments banks for financial inclusion in India' and factors for 'Challenges to payments banks in financial inclusivity in India' were identified from the available literature. Then, the dependencies of the factors on each other were established using Interpretive Structural Modeling (ISM), where the relationships between these factors were determined through experts' inputs via a template to understand the importance of the factors. On the basis of the output of ISM, Crossimpact matrix multiplication applied to classification, i.e., MICMAC, analysis has been used to categorize the factors based on their capacity to affect other factors. [ABSTRACT FROM AUTHOR]

Non-Performing Assets (NPAs) have turned out to be a major stumbling block, affecting the performance of Indian banks. Several measures were initiated by the Reserve Bank of India to reduce incidence of NPAs. For the first time in the last several years, public sector banks in India witnessed decline in gross NPAs for the year 2018-19. In this paper, an attempt is made to understand the reasons for the incidence of NPAs during 2006 to 2019 by studying the public sector and private sector banks in India. Dynamic regression model was deployed to understand the influence of past NPAs on incidence of current NPAs. Surprisingly, the influence of previous year asset quality is not significantly influencing current year asset quality. Size of the bank, profitability, credit growth, priority sector lending, accretion of NPAs and economic growth continue to have significant impact on the asset quality of the banks in India. [ABSTRACT FROM AUTHOR]

This paper analyzes the asymmetric volatility of foreign exchange rates with respect to the Indian rupee by identifying associated macroeconomic regimes in India. The paper aims to analyze the volatility spillovers and other relationships of the Indian rupee (INR) with respect to the US dollar (USD), Canadian dollar (CAD), British pound (GBP), Swiss franc (CHF) Japanese yen (YEN) and the euro (EUR) for the period 1973-2012. The study makes use of GARCH family models. The results show that the daily exchange rates of all the currencies considered exhibit volatility persistence and conditional autocorrelation. It is also found that the impact of exchange rate innovations on the conditional variance of the foreign exchange return series varies across the macroeconomic regimes. [ABSTRACT FROM AUTHOR]

Algorithmic trading has made a paradigm shift in Indian stock market. Popularity of algorithmic trading is gaining momentum among Indian traders and investors due to technological advancement. The objective of this paper is to apply Interpretive Structural Modeling (ISM) to develop a hierarchical structure among the key barriers of algorithmic trading in India. 11 barriers have been identified through the literature review which are then validated for significance, using a structured questionnaire, from the experts. ISM approach has been utilized to rank the barriers and analyze their mutual interactions. Subsequently, MICMAC analysis was conducted to reveal dependence and driving power of these barriers. MICMAC analysis also elicits the relative importance and interdependence between these barriers from the Indian context. A list of relevant barriers significantly helps the practitioners to take right decision while adopting algorithmic trading. The study has importance in the Indian context due to scarcity of research in this area. [ABSTRACT FROM AUTHOR]

This paper empirically investigates the behavior of stock returns of two premier stock markets in India, namely, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Specifically, the paper seeks to examine whether the security returns in these two markets follow Random Walk Hypothesis (RWH). Towards this end, data on major indexes during the period June 2, 1997 to February 29, 2009 are analyzed using variance ratio and autocorrelation tests. The results are inconclusive as both the tests provide mixed results. [ABSTRACT FROM AUTHOR]

Foreign Direct Investment (FDI) is the important means of promoting export. There has been an increase in the FDI in India depicting that Indian economy is an attractive place to invest in and operate business. In this paper, an attempt has been made to analyze the causal relationship between FDI and export in India. Using data from 1990 to 2013 for FDI and export from DBIE (website of RBI), the analysis is done using unit root testing, Johansen cointegration test and Granger causality test through Eviews. The paper concludes that neither FDI Granger-causes export nor export Granger-causes FDI. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between inflation, inflation volatility and economic growth for India, using both Consumer Price Index (CPI) for industrial workers and Wholesale Price Index (WPI). The study using annual data over the period 1980-2014, reveals that the level of inflation (both CPI and WPI) has negative but insignificant effect on economic growth. To analyze the impact of inflation uncertainty on growth, the study calculates inflation volatility as the fivepoint moving average of coefficient of variation of inflation. The results show that the coefficient of inflation volatility is negative and significant. This signifies that high inflation and inflation uncertainty adversely affect economic growth. Granger causality test is also used to measure the direction of causality between inflation and growth. When CPI is used as a measure of inflation, at an optimal lag length 3, there is no causality between inflation and growth. As more lags are added, the results indicate unidirectional causality from GDP growth to inflation. With WPI, the results show that causality runs from GDP growth to inflation at lag 1, which is found to be optimal. However, WPI inflation and GDP growth are found to be independent of each other as more lags are added to the model during the period of study. Hence, reducing inflation and maintaining price stability is imperative for economic growth. [ABSTRACT FROM AUTHOR]

The paper examines empirically the relation between intellectual capital efficiency and firms' market valuation in India. Using data from Indian listed companies and Pulic's Value Added Intellectual Coefficient (VAIC) measure, the paper constructs panel regression models for 10 years across seven industrial categories to examine the relationship between the intellectual capital efficiency and firms' Market-to- Book Value (MTBV). The results suggest that the explanatory power of the individual components of intellectual capital efficiency (physical capital efficiency, human capital efficiency and structural capital efficiency) is observed to be better than the aggregate composite measure (VAIC). The results also affirm that expenditure on innovative capital and relational capital captures additional information on structural capital and has a positive effect on firms' value contemporaneously. Further, in the presence of all the intellectual capital components, firms with greater innovative capital and relational capital in the ensuing year tends to have higher MTBV in the following year. The study does not support the idea that after controlling for structural capital efficiency, the firms with greater innovative capital tend to have higher MTBV during pre- and post-2008 financial crisis in general and across the Indian industries. The results extend the understanding of the role of intellectual capital in creating firms' MTBV for companies in Indian economy. [ABSTRACT FROM AUTHOR]

This paper examines both the linear and nonlinear causal relationship between crude oil price changes and stock market returns in India. In particular, the study applies alternative unit root tests with and without structural break to ascertain the shifts in crude oil price changes and stock market returns for the period 1991:01 to 2013:08. The linear and nonlinear causality tests are conducted using the standard Vector Autoregression (VAR) and the Diks and Panchenko (2006) frameworks respectively. The results from the unit root tests indicate that crude oil price changes and stock market returns are stationary. The results from the standard VAR model provide evidence of unidirectional causality from stock returns to crude oil price changes. The results of the Diks-Panchenko causality test, however, support nonlinear bidirectional causality between the two variables. [ABSTRACT FROM AUTHOR]

This paper analyzes the impact of domestic and external shocks on Indian economy by constructing, estimating and simulating a small eclectic macroeconometric model, using annual data from 1981-82 to 2015-16. With a satisfactory in sample and out -of-sample forecasting performance, the model has been employed for deterministic simulation analysis. The study evaluates the impact of domestic shock (rainfall shock) and external shocks (oil price shock, world trade shock and reserve bank foreign exchange asset shock) on the economy through various channels. The results reveal that rainfall and oil price shocks are found to reduce the real output both at aggregate and sectoral levels, leading to increase in general price level. Regarding their impact on external and fiscal sectors, rainfall shock is found to have minimal impact, whereas oil price shock is found to have significant impact. Further, reserve bank foreign exchange assets and world trade shock are found to be growth retarding and deflationary in nature. Regarding their impact on the external sector, both the shocks are found to have a significant impact; while a shock in reserve bank foreign exchange asset is found to improve it, the world income shock tends to deteriorate it. In the case of fiscal sector, both the shocks lead to a rise in fiscal deficit due to reduction in both nominal and real output. [ABSTRACT FROM AUTHOR]

The paper examines how relative price shocks can affect the price level and then inflation. Using Indian data, it is observed that: (1) Price increases exceed price decreases. Aggregate inflation depends on the distribution of relative price changes—inflation rises when the distribution is skewed to the right; (2) Such distributionbased measures of supply shocks perform better than the traditional measures, such as prices of energy and food. They moderate the price puzzle, whereby a rise in policy rates increases inflation, are significant in estimations of New Keynesian aggregate supply, and show the Indian aggregate supply curve to be flat, but subject to shifts; (3) An average Indian firm changes prices about once in a year. The estimated Calvo parameter implies that half of the Indian firms reset their prices in any period, while 66% of firms are forward looking in their price setting. These estimated real and nominal price rigidities imply policy needs to anchor inflationary expectations in response to supply shocks, but policy responses must be moderate. [ABSTRACT FROM AUTHOR]

The study largely attempts to examine the spillover from Foreign Direct Investment (FDI) in Indian manufacturing by using the firm-level data for the period 2000- 2009. With the use of Cobb-Douglas-type production function, it is observed that for the entire manufacturing sector, the impact of FDI on output growth is positive and significant. The result indicates that the increase in foreign equity at firm level and at sector level directly affects the productivity growth of the firm. However this does not hold true when analyzed at sector level. The paper also attempts to find the possible reason for positive spillover by analyzing some more factors of the present dataset. [ABSTRACT FROM AUTHOR]

The Indian economy registered significant growth after liberalization in the 1990s. The service sector and the manufacturing sector have been significant contributors to the growth of the economy. In this paper, an effort is made to understand whether the growth in the service sector had any influence on the growth of the manufacturing sector by using the data for the period from 1970-71 to 2009-10. The results of cointegration test show that there is no long-term relationship between the growth in the two sectors. [ABSTRACT FROM AUTHOR]

This paper examines the operation of credit channel of monetary policy transmission in India during the post-Liquidity Adjustment Facility (LAF) period of 2001:3 to 2011:3. Drawing on the literature, two reduced form equations-one representing nominal bank credit, and the other, real bank credit-have been estimated following an approach similar to Hendry's general-to-specific method. It is obtained that besides the positive influence of economic activity on bank credit, policy-induced expansion or contraction in deposit or money supply makes banks to adjust their credit portfolio correspondingly. Importantly, the credit channel of monetary transmission is found to be significant and robust. Specifically, the transmission of policy rate to nominal or real bank credit growth takes about seven months over the full sample period as well as across various subsample periods. Over the full sample period, 100 basis points increase in policy rate is found to reduce the annualized growth in nominal and real bank credit by 2.78% and 2.17%, respectively. However, a decline in the magnitude of the impact of policy interest rate on bank credit has been observed during the post-global financial crisis period. [ABSTRACT FROM AUTHOR]

Existing literature states that a larger percentage of unorganized enterprises are dependent on their own fund or borrowing from informal sources to finance their business, as they have limited access to credit from Formal Financial Institutions (FFIs). This paper, based on primary data, tries to examine the pattern of financing the urban unorganized enterprises in Assam, India. The results indicate that borrowing from FFIs has larger share in the total amount of capital investment made by the sample entrepreneurs, although their own fund also has a significant share in it. However, larger percentage of working capital expenditure is made through own fund of the entrepreneur. Borrowing from Semi-Formal Financial Institutions (SFFIs) and informal sources also has an important role in financing the enterprises. A logit model is estimated for the determinants of unorganized entrepreneurs' access to credit from FFIs for business expenditure. Relatively larger and registered enterprises are found to have more probability to get access to credit from FFIs. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to compare the pre-acquisition performance of domestic and cross-border Indian target firms. Past studies suggest that foreign investors mostly acquire well-performing domestic firms, while domestic target firms invest more often in poorly performing firms. But in India's case, this theory could differ due to the distinct factors impacting the relative costs and benefits, like the availability of cheap assets in India due to high bank NPA, the economic inefficiencies due to lack of technology and the capital-regulatory constraints. By studying 133 target firms, the study finds that foreign acquirers select those targets which have viable product line, good network and large asset size with low cash holdings. On the other hand, domestic investors acquire those target firms which have high public holdings and generate handsome top-line products in comparison to their industry peers but struggle to convert this top line into a reasonable bottom line. [ABSTRACT FROM AUTHOR]

The trickle down of growth from one region to another or spillover effect is implicit in the very idea of 'balanced regional development' which has always been one of the declared objectives of national policy in India. This paper is an attempt to analyze the performance of northeastern states in India in terms of their Net State Domestic Product (NSDP) growth and also to examine the growth spillover effects among the same for the period 1981-2007. The results of the study reveal that there is a considerable variation in the performance of individual states in terms of NSDP growth, with most states growing faster than the regional average. Also, a mixture of trickling down and polarization effects of economic growth is found within the northeastern region. Neither of the two opposite hypotheses holds in general. The present study contributes to the literature by exploring the dynamics of growth linkages among the northeastern states in India. [ABSTRACT FROM AUTHOR]

This paper discusses in some detail various existing approaches of measuring core inflation, evaluating their potential advantages and disadvantages. Then a variety of measures of core inflation for India based on three methods are constructed. Among these measures, three are based on conventional ex-food and energy principle and one measure excludes 15 of the most volatile components. While constructing exclusion-based indices of core inflation, measures are constructed in such a way that only a small weight gets excluded from the index of the core inflation. The other two core measures that are variations of 'Neo-Edgeworthian index' are constructed by reweighting 69 disaggregated components series of WPI. Then another class of core measures is computed based on weighted exponential smoothing which was primarily developed by Cogley (2002). Estimates of core inflation based on their indexes are then calculated for the period from 1995 to 2007 (on monthly basis). Subsequently, an empirical evaluation of these estimated core measures is performed. While choosing criteria for empirical evaluation, the following were considered: first, forward-looking monetary policy framework, viz., tracking trend inflation, and second, an attractor property of core inflation and their relative predictive power for future transient movement in inflation. The empirical findings show that the weighted exponential smoothing-based measures of core inflation perform far better compared to all other measures of core inflation in terms of similarity in means, lower volatility, tracking trend inflation and an ability to predict future transient movement in headline inflation at both 12-month and 24-month horizons. [ABSTRACT FROM AUTHOR]

This research paper examines the price behavior of equity shares of companies that indulge in insider trading of their securities. Further, it also analyzes whether reporting delays and industry differences have any impact on the magnitude of abnormal returns. A sample of 1,101 insider transactions by insiders of Bombay Stock Exchange (BSE) listed companies for the period April 1, 2009-March 31, 2013 has been utilized for analysis purpose, which includes 524 buy transactions and 577 sell transactions. The impact of insider transactions on share prices is ascertained by examining the abnormal returns on the date of transaction by using the market model. The findings of the study reveal that insiders are able to earn abnormal returns during one month post the event, whereas in the long run, the profits almost disappear. Time duration of reporting trades to stock exchange and industry differences impact the direction and magnitude of stock market returns. [ABSTRACT FROM AUTHOR]

The paper is an attempt to analyze the behavior of money demand function in India using annual data for the period 1953-2008. Gregory and Hansen (1996) cointegration results show the presence of cointegration between demand for money, real GDP and nominal interest rate with structural break in the year 1965. The study also suggests downward shift in the demand for money by about 0.33% around the year 1965. The analysis puts forward that demand for money is stable except for the period 1975-1998. [ABSTRACT FROM AUTHOR]

Empirical evidences on the transmission mechanism by which monetary policy affects the economy, particularly general prices and real activity, are essential, both for effective policy making and understanding the alternate macroeconomic theories. A consensus has largely been established on the influence of monetary policy on the economy through its impact on the spending decisions on consumption and investment. Banks play a central role in monetary transmission as monetary policy impulses through bank credit affect consumption and investment decisions of the individuals and thus affect the aggregate demand, which in turn transmits the impact to the final objectives of price and output stabilization. The present study attempts to empirically examine the nature and strength of monetary policy influence on inflation and real activity in India, with special emphasis on the role of banking channel in the transmission process. Considering the fact that the Reserve Bank of India adopted 'multiple indicator approach' in the conduct of monetary policy since April 1998, the present paper uses a Monetary Policy Indicator (MPI) to capture the policy stance appropriately. The empirical evidences reiterated monetary policy influence on inflation and real activity. The lag effect of monetary policy on inflation (about 18 months) was found to be longer as compared to real activity (about a year), implying the impact of policy shocks being realized initially in aggregate demand subsequently gets transmitted to prices. Monetary policy shocks were observed to have desired influence on interest rates and bank investments, while the effect on bank credit was observed with a lag of around one year. The empirical evidences revealed high importance of bank investment in the monetary transmission process, which seems plausible given the relevance and size of bank investment portfolio in the Indian context. [ABSTRACT FROM AUTHOR]

In this paper an attempt has been made to analyze the substitution possibilities in Haryana manufacturing industries. The study derives its rationale primarily from the fact that the growth of manufacturing sector in Haryana is the need of the hour, as the agriculture growth appears to have already reached a plateau after enjoying a period of high growth in the wake of Green Revolution. The major objective of the study is to examine trends in substitution possibilities during the pre -and post-liberalization periods. The study relies mainly on data generated by Annual Survey of Industries and covers the period from 1981-82 to 2007-08. In the year 1991, economic policy underwent substantial changes and the year is treated as a watershed for dividing the entire policy regime into two phases. The results suggest limited substitution possibilities between labor and capital, and labor and energy, while strong substitution possibilities are suggested between capital and energy. The results suggest that the hypothesis of uniform elasticity of substitution for every pair of inputs over the two policy regimes holds only partially good. While the hypothesis is accepted for substitution elasticity between capital and energy, it is rejected for labor and capital as well as for labor and energy. [ABSTRACT FROM AUTHOR]

The goal of development is to improve human well-being in a sustainable way, with a particular emphasis on less well-off. India's economic growth has received potential attention in the recent years. While the economy of India has been growing rapidly with broadly based gains in absolute incomes and many outcomes, it is also the case that progress has differed among different people and social groups. Growth needs to become more inclusive by increasing the prosperity of poorer states, where economies have expanded at a slower pace than those of richer states in the past decade. Growth strategies are likely to differ according to domestic opportunities and constraints. The growth strategies require a sense of priorities. The strategy is aimed at identifying the most binding constraints on economic growth. In the recent years, the empirical literature on economic growth and the convergence principle has devoted increasing attention to interregional analysis. In this paper, an attempt has been made to measure the inequality and locate the lagging states by applying the convergence principle taking both per capita income and per capita agricultural income as the sources of convergence. Since the agricultural sector is not performing in pace with the national economy, it implies the need for strategies for this particular sector. [ABSTRACT FROM AUTHOR]

This study investigates how household inflation expectations relate to realized inflation, and uses biased expectations hypothesis (BEH) to understand the association between inflation expectations and realized inflation in the food sector. Household survey data, wholesale price index (WPI), and consumer price index (CPI)-based data on inflation are used in the study and the data was sourced from the Reserve Bank of India (RBI) and Ministry of Statistics and Program Implementation, Government of India. The obtained results were cross-validated using auto-SARIMAX algorithm in a machine learning (ML) framework. The study finds that expected and realized inflation have significant causal relationships; this further supports BEH and reveals how household inflation expectations impact actual market inflation, and vice versa. Hence, these are broadly complementary. However, changes may occur in these aspects, and households and markets must prepare for these changes and plan their future accordingly. [ABSTRACT FROM AUTHOR]

The study examines the role of foreign direct investment (FDI) in shaping the export trajectory of the Indian automobile sector. The study uses VECM technique to determine the existence of cointegration between FDI inflows and exports of automobile industry, and to check the long-run and short-run dynamism among the variables. It uses annual time series data on exports and FDI inflows in the industry by considering Indian rupee real effective exchange rate (REER) and world GDP as control variables. The study finds that FDI inflows positively and significantly affect the exports of automobile industry in India in the long run. The findings also validate the J-curve theory of effect of depreciation on the exports of automobile industry that depreciation of Indian rupee has a favorable effect on the exports or trade balance of this industry. The study finds a significant relationship between FDI inflows and exports in only one direction, i.e., running from FDI inflows to exports of the industry. Furthermore, the results show that there is bidirectional causality between India’s rupee REER and FDI inflows in automobile industry. The results suggest that providing a conducive environment to foreign players would positively impact the exports of the automobile industry. [ABSTRACT FROM AUTHOR]

Developmental expenditures, in the form of capital outlay, by the fiscal authorities are the key for the sustained economic growth of any nation or state. Most of the Indian states are witnessing an increasing trend in their capital outlay in general and with respect to economic and social infrastructure in particular to sustain a continuous growth momentum. Most of the previous literatures have proven that there is a high correlation between capital outlay and economic growth. Keeping in view the recent development relating to the changing dynamics of the capital expenditure, the present paper tries to empirically analyze the direction and degree of relationship between capital outlay and economic growth across the states of India. For empirical estimation, the study has used the panel econometrics framework. The findings suggest that there is a significant definite relationship between capital outlay and economic growth in general. Further, at disaggregated level, the results suggest that both the social and economic expenditure has greater contribution in sustaining a high level of economic growth in the case of Indian states, as has been suggested by the Keynesian approach. The outcome also supports the view that there is a greater role of fiscal authority in maintaining a sustainable and inclusive growth process in the states. [ABSTRACT FROM AUTHOR]

The present paper tests for short-run causality between money supply and Gross Domestic Product (GDP) in India during the period 1954-2013 adopting the Toda and Yamamoto (1995) modified Granger causality approach under a Vector Autoregression (VAR) environment. Exponentially detrended annual time series data at constant price of GDP, narrow money supply and broad money supply are used for this purpose. Alternative tests for structural breaks reveal significant breaks in the variables around the period 2001-2004. The findings are suggestive of a bidirectional causality between broad money and GDP, while narrow money is found to significantly Granger-cause GDP, but the converse is insignificant implying unidirectional causality from narrow money to GDP. The study is of the view that both narrow and broad money in India have a long-run equilibrium relationship with real GDP and short-run causal relations are therefore anticipated. [ABSTRACT FROM AUTHOR]

Against the background of international scenario of exchange rate volatility, the present paper analyzes rupee volatility and its impact on the macroeconomic variables of India considering data for the period 1997-2013. The evidence shows that the exchange rate volatility of India is not purely a domestic phenomenon. Further, the results of log-log regression model show that the negative impact of depreciation is limited to inflation and trade balance. All other variables show positive impact. Thus, strong empirical evidence is obtained to conclude that the impact of appreciation on macroeconomic variables is higher as compared to that of depreciation on these variables. [ABSTRACT FROM AUTHOR]