Stabilising the Indian Business Cycle

NIPFP Working Paper 67
[PDF]

Ajay Shah and Ila Patnaik
February 2010

Interstate Distribution of Central Expenditure and Subsidies

NIPFP Working Paper 66
[PDF]

Pinaki Chakraborty, Anit N. Mukherjee and H.K. Amar Nath
February 2010

Graduating to Globalisation: A Study of Southern Multinationals

NIPFP Working Paper 65
[Link]

Dilek Demirbas, Ila Patnaik and Ajay Shah
February 2010

Abstract

FDI by firms in developing countries is a recent phenomenon and demands a study of relationship between firm productivity and different modes of globalization activities. This paper attempts to understand this relationship through ordered probit models, examining two key hypotheses using firm level panel data from India. First, we test whether there are characteristic differences between domestic firms, exporting firms and firms engaging with FDI. Second, we test if FDI is an integral part of the evolution of firms in developing countries. Our results suggest that there are strong differences between domestic firms, exporting firms, and firms that invest abroad, especially in their knowledge investment, indicating the presence of a ladder of quality in graduating to globalisation.

Asia Confronts the Impossible Trinity

NIPFP Working Paper 64
[PDF]

Ila Patnaik and Ajay Shah
January 2010

Abstract

In this paper, we examine capital account openness and exchange rate flexibility in 11 Asian countries. Asia has made slow progress on de jure capital account openness, but has made much more progress on de facto capital account openness. While there is a slow pace of increase in exchange rate flexibility, most Asian countries continue to have largely inflexible exchange rates. This combination - of moving forward with de facto capital account integration without bringing in exchange rate flexibility - has lead to procyclicality of monetary policy when capital flows are procyclical. The paper emphasizes the case for a consistent monetary policy framework.

Why India Choked When Lehman Broke

NIPFP Working Paper 63
[PDF]

Ila Patnaik and Ajay Shah
January 2010

Abstract

India has an elaborate system of capital controls which impede capital mobility and particularly short-term debt. Yet, when the global money market fell into turmoil after the bankruptcy of Lehman Brothers on 13/14 September 2008, the Indian money market immediately experienced considerable stress, and the operating procedures of monetary policy broke down. We suggest that Indian multinationals were using the global money market and were short of dollars on 15 September. They borrowed in India and took capital out of the country. We make three predictions that follow from this hypothesis, and find that the evidence matches these predictions. This suggests an important role for Indian multinationals in India's evolution towards de facto convertibility.

The Difficulties of the Chinese and Indian Exchange Rate Regimes

NIPFP Working Paper 62
[PDF]

Ila Patnaik and Ajay Shah
August 2009

Examining the Decoupling Hypothesis for India

NIPFP Working Paper 61
[PDF]

Shruthi Jayaram, Ila Patnaik, Ajay Shah
June 2009

Abstract
This paper examines the decoupling hypothesis for India. We analyse business cycle synchronisation between India and a set of industrial economies, particularly the United States, over the period 1992 to 2008. The evidence suggests that the Indian business cycle exhibits increasing co-movement with business cycles in industrial economies over this period. Indian business cycle synchronisation is stronger with industrial countries as a whole as opposed to the co-movement found with the US.