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Separating Shocks from Cyclicality in Indian Aggregate Supply

Author

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  • Ashima Goyal
  • Shruti Tripathi
Abstract
An ongoing debate on the shape of the Indian aggregate supply curve (AS) raises interesting econometric and policy issues. Systematic steps were taken to improve the estimation. On adding better variable definitions, a positive slope got, but on using a better measure of supply-shocks the slope decreases in size. The result that the Indian Aggregare Ssupply curve is relatively flat, but subject to frequent shifts, suggests the output cost of disinflation can be high, but the way to moderate it is to address the factors causing shifts of the curve.

Suggested Citation

  • Ashima Goyal & Shruti Tripathi, 2015. "Separating Shocks from Cyclicality in Indian Aggregate Supply," Working Papers id:6673, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:6673
    Note: Institutional Papers
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Ashima Goyal & Sritama Ray, 2022. "Exploring correlations between aggregate demand and supply shocks in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2022-004, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Taniya Ghosh & Sohini Sahu & Siddhartha Chattopadhyay, 2017. "Households' Inflation Expectations in India: Role of Economic Policy Uncertainty and Global Financial Uncertainty Spill-over," Working Papers id:11890, eSocialSciences.
    3. Szafranek, Karol, 2017. "Flattening of the New Keynesian Phillips curve: Evidence for an emerging, small open economy," Economic Modelling, Elsevier, vol. 63(C), pages 334-348.
    4. Harendra Behera & Garima Wahi & Muneesh Kapur, 2017. "Phillips Curve Relationship in India: Evidence from State-Level Analysis," Working Papers id:11973, eSocialSciences.
    5. Ashima Goyal & Abhishek Kumar, 2022. "News, noise, and Indian business cycle," Bulletin of Economic Research, Wiley Blackwell, vol. 74(2), pages 503-538, April.
    6. Goyal, Ashima & Kumar, Abhishek, 2018. "Money and business cycle: Evidence from India," The Journal of Economic Asymmetries, Elsevier, vol. 18(C), pages 1-1.
    7. Yoshino, Naoyuki & Paramanik, Rajendra N & Gopakumar, K U & Taghizadeh-Hesary, Farhad & Revilla, Ma. Laarni & Seetha Ram, K E, 2020. "An Aggregate-Level Macro Model for the Indian Economy," ADBI Working Papers 1201, Asian Development Bank Institute.
    8. Holtemöller, Oliver & Mallick, Sushanta, 2016. "Global food prices and monetary policy in an emerging market economy: The case of India," Journal of Asian Economics, Elsevier, vol. 46(C), pages 56-70.
    9. Ashima Goyal, 2016. "Abductive reasoning in macroeconomics," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-022, Indira Gandhi Institute of Development Research, Mumbai, India.
    10. Ashima Goyal & Gagan Goel, 2021. "Correlated Shocks, Hysteresis, and the Sacrifice Ratio: Evidence from India," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(10), pages 2929-2945, August.
    11. Goyal, Ashima & Arora, Sanchit, 2016. "Estimating the Indian natural interest rate: A semi-structural approach," Economic Modelling, Elsevier, vol. 58(C), pages 141-153.
    12. Bhavesh Salunkhe & Anuradha Patnaik, 2019. "Inflation Dynamics and Monetary Policy in India: A New Keynesian Phillips Curve Perspective," South Asian Journal of Macroeconomics and Public Finance, , vol. 8(2), pages 144-179, December.
    13. Ashima Goyal, 2018. "The Indian fiscal-monetary framework: Dominance or coordination?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-010, Indira Gandhi Institute of Development Research, Mumbai, India.
    14. Ashima Goyal & Abhishek Kumar, 2020. "A DSGE Model-Based Analysis of the Indian Slowdown," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-38, April.
    15. Taniya Ghosh & Sohini Sahu & Siddhartha Chattopadhyay, 2021. "Inflation expectations of households in India: Role of oil prices, economic policy uncertainty, and spillover of global financial uncertainty," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 230-251, April.
    16. Ashima Goyal, 2016. "Unconventional monetary policy in emerging markets," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 9(2), pages 101-108, July.

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    More about this item

    Keywords

    price adjustment; Indian aggregate supply; slope; shocks; firms' price-setting; marginal costs; inflation; output; cyclicality;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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