Indira Gandhi Institute of Development Research

About: Indira Gandhi Institute of Development Research is a facility organization based out in Mumbai, Maharashtra, India. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 307 authors who have published 1021 publications receiving 18848 citations.

Price Elasticity Estimates for Tobacco and Other Addictive Goods in India

Abstract: The 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.

Active monetary policy and the slowdown: Evidence from DSGE based Indian aggregate demand and supply

Abstract: We explore reasons for the strongly asymmetric Indian monetary transmission and response to other shocks, compared to those of the United States, obtained in a standard New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. While counterfactual analysis moderates other impulse responses, it suggests large cost shocks remain a primitive cause of inflation, and the strong transmission comes from large interest rate changes. Reducing the variance of the interest rate shock can significantly moderate the large output cost. Asymmetric excess volatility due to preference and technology shocks is reduced on introducing regime switching between multiple steady-states. The estimated model including multiple regimes is therefore used to obtain aggregate demand and aggregate supply schedules, which incorporate the policy reaction function, and to identify their shifts during the Indian slowdown. The correlation between factors shifting aggregate demand and supply is estimated. Since it is negative it aggravates the shocks. The post 2011 slowdown is explained by severe demand contraction in response to adverse supply shocks. Habit persistence in consumption changes the slope of both aggregate demand and supply curves significantly.

Is there a trade-off between social and financial performance of public commercial banks in India? A multi-activity DEA model with shared inputs and undesirable outputs

Abstract: Indian public commercial banks play a crucial role in the financial support for the economic development, poverty alleviation, and women's empowerment. As social banks, they have dual performance objectives of financing the vulnerable sections of society as well as providing mainstream financial services. Balancing these twin missions is the biggest challenge for these hybrid enterprises. To date, no study has been published giving evidence on whether these banks are efficient in both facets of their dual goals. For this reason, this paper adds to the literature by measuring the social and financial efficiency of a sample of 26 Indian public banks over 2011–2014 by using an innovative Multi-activity Data Envelopment Analysis (MDEA) model with shared inputs and undesirable outputs. Our study also examines whether there is a conflict or trade-off between socially responsible and for-profit banking practices. We find that Indian public banks have managed their dual mission relatively well, but on average, they have been much more efficient in social (99.4%) than conventional banking (81.9%) activity. Moreover, this study shows a significant synergy effect between social and financial performance. However, when regional differences across India are considered by comparing the social and financial efficiency scores for different degrees of economic and human development in Indian states, the significant synergy effect is only confirmed in those public banks located in less more economically developed Indian states.

Market Microstructure Considerations in Index Construction

Abstract: Illiquidity of securities in a market index generates noise in the index, increases the tracking error experienced by index funds and increases basis risk on an index futures market. This paper proposes methods where liquidity of alternative stocks explicitly influences index construction. These methods are particularly appropriate on markets where liquidity is accurately observed, such as the open electronic limit order book. The results obtained in applying these ideas in the construction of India's NSE-50 index are reported.

Methodology of the Social Sciences in the Age of Complexity: Unity, Autonomy or Integration?:

Abstract: The principle of ‘unity of sciences’ (comprising natural, social and human sciences) has a long history. While the term ‘unity’ lends itself to various interpretations, in recent years it is generally understood as ‘methodological unity’. In opposition to the ‘unity’ viewpoint, several social scientists have argued for the methodological autonomy of social sciences. This article attempts to analyze the reasons behind the triumph of the ‘unity’ principle around the 1960s, and how it ushered in an era of formalism in social sciences, especially economics. Dissatisfaction with formalism, in general, and Bourbakism, in particular, in recent years has prompted the search for alternative methodologies in the social sciences, with complexity theory offering much promise.JEL: A12, B41