Loughborough University
Leicestershire, UK
LE11 3TU
+44 (0)1509 263171
Loughborough University

Loughborough University Institutional Repository

Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/2061

Title: A dynamic macroeconometric model for short-run stabilization in India
Authors: Mallick, Sushanta K.
Issue Date: 2004
Publisher: © Taylor and Francis
Citation: MALLICK, S.K., 2004. A dynamic macroeconometric model for short-run stabilization in India. Applied Economics, 36, pp.261-276.
Abstract: A small macroeconometric model examining the determinants of India’s trade and inflation is developed to address the effects of a reform policy package similar to those implemented in 1991. This is different from the previous studies in two important respects. First, inflation has been modelled in an open economy context, and second, the non-stationarity of the data into the model and estimation procedures has been explicitly incorporated, suggesting that the stationarity assumption in earlier studies may be a source of misspecification. The model in this paper has been estimated using data from 1950 to 1995 employing fully modified Phillips–Hansen method of estimation to obtain the cointegrating relations and the short-run dynamic model. Policy simulations using dynamic simulation method compare the responses to devaluation with the responses to tight credit policy. It is shown that the trade balance effects of tight credit policy are more enduring than that of devaluation. The simulations demonstrate that the devaluation actually worsens trade balance and hence devaluation cannot be an option in response to a negative trade shock, whereas the reduction in domestic credit reflecting demand contraction produces a desirable improvement in the trade balance.
Description: This is Closed Access. The article was published in the journal, Applied Economics [© Taylor and Francis] and is available at: http://journalsonline.tandf.co.uk/openurl.asp?genre=journal&issn=0003-6846.
URI: https://dspace.lboro.ac.uk/2134/2061
ISSN: 0003–6846
Appears in Collections:Closed Access (Economics)

Files associated with this item:

File Description SizeFormat
AppliedEcon04.pdf221.29 kBAdobe PDFView/Open


SFX Query

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.