334 research outputs found
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Debt resolution processes for sovereign debt: Current policy issues
No full textConsider a two-period situation. In the first period a consumer and a firm bargain over the price
of a bond. The objective is a project which takes one period to come on stream. Both agents
prefer production but the consumer is less patient than the firm. The outcome is
underproduction. A condition for the intervention of a bank exists. It is shown that
intermediation is unstable. The potentially stabilising role of money is discussed
Inter-industry differences in capital structure: Evidence from India
No full textThe purpose of this paper is to investigate empirically the existence of inter-industry
differences in the capital structure of Indian firms and identify the possible sources of
such variations in capital structure. The technique used for this cross-sectional analysis is
one way analysis of variance and the analysis covers the pre and post-liberalization
periods separately to indicate if there is a clear break in the financing pattern of the Indian
firms due to the policy shift. Though differences is firm size contributes to the existing
variation in financial leverage ratio across industry-classes to some extent, it is the nature
of the industry itself or more precisely the differences in the fund requirement of industry
groups based on the technology used, which is a potential source of the existing
variation
Reducing default rate in rural credit: How effective is enhanced supervision approach for formal financial institutions?
No full textFormal financial institutions viz. commercial banks are gradually shifting their priorities from rural credit due to many practical reasons. High default rate and non-viability of rural credit, and increasing pressure on these formal financial institutions, to be more profitable, are few of the basic reasons. This paper focuses on one probable approach of default mitigation, that is, enhanced supervision, which is one of the potential reasons for high default rate in rural sector. The paper models a specific type of interaction between the regulatory and the institution and concludes that in a regulated competitive environment the institutions will not tend to increase supervision for higher recovery of delivered credit unless the regulatory intervenes and directs the institutions to do so. Even after such intervention from the regulatory, the institutions will find it optimal to invest less in additional supervision in rural sector if rate of return is higher or the default rate is lower in alternative sectors of investment
Regulations and price discovery: oil spot and futures markets
No full textIn a period of great oil price volatility, the paper assesses the role of expected net demand compared to
liquidity and leverage driven expansion in net long positions. We apply time series tests for mutual and
across exchange causality, and lead-lag relationships, between crude oil spot and futures prices on two
international and one Indian commodity exchange. We also search for short duration bubbles, and how
they differ across exchanges. The results show expectations mediated through financial markets did not
lead to persistent deviations from fundamentals. There is mutual Granger causality between spot and
futures, and in the error correction model for mature exchanges, spot leads futures. Mature market
exchanges lead in price discovery. Futures in these markets lead Indian (daily) futures-markets are
integrated. But there is stronger evidence of short-term or collapsing bubbles in mature market futures
compared to Indian, although mature markets have a higher share of hedging. Indian regulations such
as position limits may have mitigated short duration bubbles. It follows leverage due to lax regulation
may be responsible for excess volatility. Well-designed regulations can improve market functioning
Price elasticity estimates for tobacco and other addictive goods in India
No full textThe tax base of tobacco in India is found to be heavily depended on about fteen per
cent of the tobacco users who represent cigarettes smokers. Non-cigarette tobacco
products used by the majority of tobacco users are largely out of the tax net. Analysis
of the price elasticity of various tobacco products would bring out the potential of tax
as an instrument to control tobacco use of any kind. In this context, this paper
examines how the demand for a variety of tobacco products and addictive goods
such as pan and alcohol respond to changes in prices. The spatial variations of
prices that are obtained from a cross section of 120,000 households spread across the
country have been used for this purpose. Estimates of price elasticities showed that
the own price elasticity estimates of various addictive goods in India ranged between
0:5 to 1:0 with bidis, leaf tobacco and alcohol having elasticities close to unity,
cigarettes being the least price elastic of all. As against the general notions regarding
the complementarity between cigarettes and alcohol, our study nds that these are
substitutes at least in urban India. We also observed that, over a ve year period,
the addictive goods such as bidis and leaf tobacco in India have become slightly more
price responsive while elasticity of cigarettes and pan have stabilized. With some
assumptions, it is shown that taxes on cigarettes can be raised nearly 2.5 times the
current level while that of bidis can be raised tenfold without any fall in revenue
Understanding industrial energy use: Physical energy intensity changes in Indian manufacturing sector
No full textWe develop and analyze physical energy intensity indicators for Indian manufacturing sector.
Energy consumption in five industrial sub-sectors, viz., iron and steel, aluminium, textiles,
paper and cement is examined for the period 1990─2005. It is feasible to develop specific
energy consumption indicators that reflect the physical reality more accurately than monetary
energy intensities. These indicators allow us to analyze the effect of change in product mix over
time. The use of physical energy intensity indicators improves comparability between countries,
offers valuable input for policy-makers regarding intra-sectoral structural changes, and
provides detailed explanation for observed changes in energy intensity. Hence, the results of
the study point out the need to use physical indicators for policy making
Rankings of economics journals and departments in India
No full textThis paper is the first attempt to rank economics departments of Indian Institutions based on their
research output. Two rankings, one based on publications in international journals, and the other based
on publications in domestic journals are derived. The rankings based on publications in international
journals are obtained using the impact values of 159 journals found in Kalaitzidakis et al. (2003).
Rankings based on publications in domestic journals are based on impact values of 20 journals. Since
there are no published studies on ranking of domestic journals, we derived the rankings of domestic
journals by using the iterative method suggested in Kalaitzidakis et al. (2003). The department rankings
are constructed using two approaches namely, the ‘flow approach’ and the ‘stock approach’. Under the
‘flow approach’ the rankings are based on the total output produced by a particular department over a
period of time while under the ‘stock approach’ the rankings are based on the publication history of
existing faculty members in an institution. From these rankings the trend of research work and the
growth of the department of a university are studied
India's fiscal and monetary framework: Growth in an opening economy
No full textSince a crisis is a shock impinging on a system, the response can be used to deduce aspects of the
system’s structure. Analysis of the crisis and recovery suggests aggregate supply in India is elastic but
subject to upward shocks. This has implications for the exit and for fiscal consolidation. Both monetary
and fiscal policy should identify measures that would reduce costs, while preventing too large a demand
contraction. Specific policies are identified and Indian policies evaluated
Cross-LoC trade in Kashmir: From line of control to line of commerce
No full textThe initiation of Cross-Line of Control (LoC) trade across Jammu and Kashmir in October 2008
signaled the beginning of a new era. It was 61 years ago in 1947 that trade across line of control had
stopped. The initiative has received support from business community since its start despite numerous
impediments including barter exchange of goods, lack of communication, no banking channels, deficient
legal contract enforcement, limit on tradable goods, structural difficulties in free movement and other
barriers. This study examines how business entities and individuals in Jammu and Kashmir view trade
transactions with the other side and perceptions about the economic viability of Cross-LoC trade. More
specifically the paper presents primary data obtained from various stakeholders mainly the businessmen
who trade on Uri-Muzaffarabad and Poonch-Rawalakote routes (The two transitory points from where
the present Cross-Loc trade takes place). The study reveals that trade has increased significantly and
trade in agriculture commodities has shown a robust growth, while handicrafts sector that constitutes
backbone of the region’s economy has not performed up to expectations
Monetary operating procedures: Principles and the Indian process
No full textAs markets deepen and interest elasticities increase it is optimal for emerging markets to shift towards
an interest rate instrument since continuing monetization of the economy implies money demand shocks
are large. In an extension of the classic instrument choice problem to the case of frequent supply shocks,
it is shown the variance of output is lower with the interest rate rather than a monetary aggregate as
instrument, if the interest elasticity of aggregate demand is negative, and the interest elasticity of money
demand is high or low. It is necessary to design an appropriate monetary policy response to supply
shocks. An evaluation of India’s monetary policy procedures and of the recent fine-tuning of the
liquidity adjustment facility finds them to be in tune with these first principles and in the direction of
international best practices. But a survey of country experiences and procedures, and some aspects of
the Indian context suggest further improvements