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.

Incentives from exchange rate regimes in an institutional context

Abstract: An open economy macromodel, calibrated to typical institutions and shocks of a populous emerging market economy, shows that a monetary stimulus preceding a supply shock can abort inflation at minimum output cost, since of the appreciation of exchange rates, accompanying a fall in interest rates and rise in output. Analytic results obtained for two periods are generalized through simulations and validated through estimation. One instrument achieves both domestic output and exchange rate objectives, partly since it creates correct incentives for foreign exchange traders. Strategic interactions imply supporting institutions are required to coordinate monetary, fiscal policy, and markets to the optimal equilibrium.

Decomposing Poverty Change: Deciphering Change in Total Population and Beyond

Abstract: In the understanding of decomposing poverty change, the growth effect of mean income is replaced with the growth effect of total income and the impact of change in total population. These two, along with changes in inequality, form the three broader effects that can be computed in multiple ways depending upon the base period and the sequence of calculation. Changing the base does not alter the broader effects while specific attributions within each effect get interchanged. For a given base, there will be six possible sequences and we take an average of these to compute the three broad effects. Finally, poverty change on account of the three broad effects comprising growth of total income, change in inequality, and change in total population are shown as part of the within-group effect while change in population shares, which is different from change in total population, is a between-group effect. We provide empirical illustrations with data from India.

The Linear Complementarity Problem with Exact Order Matrices

Abstract: Dedicated to Professor K. G. Ramamurthy on the occasion of his 60th birthday. A real n by n matrix A is called an NP-matrix of exact order k if the principal minors of A of order 1 through n + k are negative positive and n-k + 1 through n are positive negative. In this paper the properties of exact order 1 and 2 matrices are investigated, using the linear complementarity problem LCPq, A for each q ∈ Rn. A complete characterization of the class of exact order 1 based on the number of solutions to the LCPq, A for each q ∈ Rn is presented. In the last season we consider the problem of computing a solution to the LCPq, A when A is a matrix of exact order 1 or 2.

Sovereigns and Banks in the Euro Area: A Tale of Two Crises

Abstract: This study attempts to identify and trace inter-linkages between sovereign and banking risk in the euro area. To this end, we use an indicator of banking risk in each country based on the Contingent Claim Analysis literature, and 10-year government yield spreads over Germany as a measure of sovereign risk. We apply a dynamic approach to testing for Granger causality between the two measures of risk in 10 euro area countries, allowing us to check for contagion in the form of a significant and abrupt increase in short-run causal linkages. The empirical results indicate that episodes of contagion vary considerably in both directions over time and within the different EMU countries. Significantly, we find that causal linkages tend to strengthen particularly at the time of major financial crises. The empirical evidence suggests the presence of contagion, mainly from banks to sovereigns.