ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Ashima GoyalSubscribe to Ashima Goyal

Psychology, Cyclicality or Social Programmes

Analysing the wage rise for Indian rural unskilled male labourers and its effect on inflation, this study tests theoretical priors derived from concepts of fair wages using a state-level panel, correlation of inflation peaks, and sectoral changes in employment, wages, and productivity. Food price inflation and the fiscal deficit are consistently significant in dynamic panel regressions, with the effect of the first three times larger. More than the spread of employment insurance, overreaction to high food prices raised wages. Productivity increased in agriculture but less than in other sectors. The results support psychological causal factors alongside cyclical ones.

The Exchange Rate and Growth

Devaluing to Prosperity: Misaligned Currencies and Their Growth Consequences by Surjit Bhalla (New Delhi: Oxford University Press), 2013; pp 263 + xviii.

Regulatory Structure for Financial Stability and Development

To understand the appropriate regulatory response to a financial crisis, we start from the basic market failures that justify regulation in financial markets. Regulation that induces better outcomes by creating correct incentives for market participants is the key to reform. A combination of micro- and macro-prudential regulation can moderate pro-cyclicality, information failure and market power. Global prudential standards can push financial firms to choose safe over risky strategies, by removing the moral hazard from bailouts, and assuring firms that competitors will not adopt risky strategies either. Universal application of basic standards can prevent regulatory arbitrage. A pure principles-based regulatory approach may be too flexible, but principle-based rules retain sufficient operational flexibility and universality.

Assessing the Fiscal Capacity of Indian Governments

This article assesses the record of different post-reform governments in meeting their fiscal targets and improving both delivery and finances. A variety of indices are constructed, and consistency checks devised to measure relative performance. No government has achieved its targets, but the Congress Party has had the best record in keeping its promises, and reducing deficits. The effect of the growth dividend on lowering government debt and deficits is established. But the failure of the government finances to improve proportionately with this suggests the need for further improvement in expenditure management.

Avoiding Handicaps: Assessing Global Policy Advice for India

Aaditya Mattoo and Arvind Subramanian ("India and Bretton Woods II", EPW, 8 November 2008) offer useful suggestions for India's stance in global groups such as at the g-20. Subramanian ("Preventing and Responding to the Crisis of 2018", EPW, 10 January 2009) does the same for India's macro-policy responses following the financial crisis. But the arguments of the two sets of proposals are inconsistent. Mattoo and Subramanian want India to support a proposal to give the World Trade Organisation enforcement powers against undervalued exchange rates, but Subramanian wants India to follow self-insurance as China did. The reason for the inconsistency may be the authors' preference for India to follow the United States' interests in international negotiations, but to follow its own interests when domestic policy is involved.

Governance in India's Public Transport Systems: Comparing Indian Railways and Airlines

The paper examines the basic reasons and feasible remedies for organisational weakness in India's public transport systems and the possible contribution of ownership, industry and management structure, leadership, social norms, and institutional incentives to alleviating the weaknesses. The arguments are illustrated with reference to the public rail and air services and help to understand why some public sector transport undertakings have performed better than others. The most effective changes are those that create incentives, broadly defined, for individuals to improve productivity.

Indian Policy Modelling: Forging New Links

Forging New Links Economic Policy Modelling for India by V Pandit and K Krishnamurthy (eds); Oxford University Press, New Delhi, 2002;
ASHIMA GOYAL This book aims to demonstrate the effective application of econometric methodology to modelling for Indian policy analysis. While the focus is largely on various dimensions of monetary policy, the methodologies vary over structural modelling, optimal control simulation models, time series analysis, and almost ideal demand systems. Although a complex and rapidly changing Indian macroeconomy has yet to be satisfactorily mapped, the various models give snapshots from differing perspectives that help to build up a composite picture.

Dictatorship, Democracy and Institutions

Using a systematic comparison of reform period policy choices and outcomes in China and India, this article explores the hypothesis that macroeconomic policies are influenced by the political structure. China's low but positive real interest rates, facilitated by greater exchange rate volatility, and high infrastructure investment allowed it to outperform India in its first post-reform decade. Political structure did lead to specific inefficiencies in macroeconomic outcomes, but macro-institutional changes exist that can improve policy. More openness under similar labour endowments gives both countries the opportunity to commit to more effective, stable and yet stimulatory macroeconomic institutions and policies.

Budgets: Promise and Performance

As an analysis of previous budgets reveals that there has always been a wide divergence between the government's promises and its performance. Overall there is very little connection between planned and actual growth in allocations to different sectors, and large fluctuations in allocations to agriculture. A worrying factor with regard to the current budget is the large reliance on extra-budgetary resources for the plan when these have not materialised in the past few years.

Rupee: Changing Trends

The immediate causes of the rupee appreciation in April were the weakness in the dollar and large FII inflows due to the initial public offerings of public sector units. Depreciation followed in May but the changes occurred because the RBI abstained from its normal intervention, which could have easily prevented the plus minus 5 per cent variation in the rupee. Perhaps it was sending a signal to markets that they should learn to live with limited two-way volatility.

Rupee Reversals

Rupee Reversals More on Real Exchange Rate, Fiscal Deficits and Capital Flows ASHIMA GOYAL It is instructive to link the comment the Lal, Bery and Pant (2003) (LBP from now on) paper has provoked with the excitement about the recent rupee reversals. The LBP paper got attention maybe partly because it suggested a reversal of a policy theme which has been dominant through the 1990s


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