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.

A DSGE model-based analysis of the Indian slowdown

Abstract: In this paper we take a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model to the Indian data using Kalman filter based maximum likelihood estimation. Our model based output gap tracks the statistical Hodrick-Prescott filter based output gap well. Comparison of estimated parameters, impulse responses and forecast error variance decomposition between India and United States points to differences in the structure of the two economies and of their inflationary process. Our estimates suggest higher value of habit persistence, more volatile markup and interest rate shocks in India. Markup shocks play a much larger role in determination of Indian inflation, pointing to the importance of supply side factors. Impulse responses show a higher impact of interest rate shocks on output and inflation, and lower impact of technology shocks on output in comparison to US. The latter again suggests the presence of supply side bottlenecks. We use smoothed states obtained from the Kalman filter to create counterfactual paths of output and Inflation (during 2009 Q4 to 2013 Q2) in presence of a given shock. In the post 2011 slowdown, monetary shock imposed significant output cost and for a brief period of time made the output gap negative.

Government Expenditure in India: Composition and Multipliers

Abstract: We estimate fiscal multipliers for total, capital (capex), and revenue (revex) Indian government expenditure using a two variable Structural Vector Auto-Regression (SVAR). Our quarterly data allows us to estimate both short- and long-run multipliers. We then extend and re-estimate the model including supply shocks and the monetary policy response sequentially and together and re-estimate the multipliers. The long-run capex multiplier remains much larger than the corresponding revex multiplier in all the estimations. The short run impact multiplier is the highest for revex, but does not rise after the first quarter. The capex peak multiplier in the 2nd quarter is 1.6–1.9 times larger. The cumulative multiplier is also the highest for capex, 2.4–6.5 times the size of the revex multiplier. Capex also reduces inflation more over the long-term. Despite this, capex shows greater volatility since it is more vulnerable to discretionary cuts. Monetary accommodation of capex and revex is allowed to differ. It varies in the absence/presence of supply shocks. The combination of a direct cut in capex and monetary tightening in response to a supply shock reduces the capex multiplier. The results are consistent with an elastic long-run aggregate supply. Disaggregated evaluation of spending policy, therefore, gives useful insights.

Identifying and exploiting human needs for a people centric evolving knowledge society: A case study of Indian ICT Emergence

Abstract: The introduction of new technologies upon a society prematurely often results in fears of good and bad, especially when no consideration is given to human needs. This situation becomes more acute in circumstances when sophisticated technology from the west claims to satisfy the human needs of a continental and traditional country like India. This paper highlights the new revitalization of Indian society from a socio-economic and cultural point of view and reiterates the possibility of technology's failure to address human needs. A case study of Information and Communication Technology (ICT) emergence in the Indian context is made in order to examine various issues such as the new technological divide syndrome, ICT needs of rural populations, and others.

A Nonlinear Optimal Control Approach to Stabilization of Business Cycles of Finance Agents

Abstract: The article proposes a new nonlinear optimal control method for the stabilization of the business cycles of interconnected finance agents. First, the dynamics of the interacting finance agents and of the associated business cycles is described by a model of coupled nonlinear oscillators. Next, this dynamic model undergoes approximate linearization round a temporary operating point which is defined by the present value of the system’s state vector and the last value of the control inputs vector that was exerted on it. The linearization procedure is based on Taylor series expansion of the dynamic model and on the computation of Jacobian matrices. Next, for the linearized model of the interacting finance agents, an H-infinity feedback controller is designed. The computation of the feedback control gain requires the solution of an algebraic Riccati equation at each iteration of the control algorithm. Through Lyapunov stability analysis it is proven that the control scheme is globally asymptotically stable.

Share holding Pattern and Firm Performance

Abstract: Corporate Governance deals with the issue of how suppliers of finance to corporations assure themselves of getting a return on their investment. Several Studies have examined the relationship between ownership structure and firm performance. Using di erent data samples most of the studies provide general support for the argument that increase in managerial ownership increases firm performance. However, these results have been questioned recently. This study examines empirically the effects of ownership structure on the firm performance for a large sample of Indian Corporate Firms, from an `agency perspective'. We examine the effect of interactions between corporate, foreign, financial institutions, and managerial ownership on firm performance. We provide empirical evidence, which suggests that firm size and age in positively related to the firm performance. Using panel data framework, we show that a large fraction of cross-sectional variation, in firm performance, found in several studies, is explained by unobserved firm heterogeneity, rather than the ownership structure. We do not find any evidence that the differences in ownership structure, affect firm performance; after controlling for observed firm characteristics and firm fixed effects.