Articles by Ashima Goyal

Food Price as a Nominal Standard Ashima Goyal Foodgrain Price Stabilisation in Developing Countries: Issues and Experiences in Asia by N Islam and S Thomas, International Food Policy Research Institute; Washington, D C, pp 136 + viii.

Interpreting Amartya Sen

Crisis and Indian Immunity Ashima Goyal Shridhar Dash In many south-east Asian countries, the short-term bank lending interest rate significantly exceeded the US rate through the 1990s. This interest differential exceeded the change in nominal exchange rates over the period. Country risk was low because growth was high. Governments committed to stimulate exports would not allow an appreciation of the exchange rate, and the large foreign inflows ruled out an immediate depreciation. Therefore private corporations and banks had a large incentive to borrow abroad in the short- term without hedging. But because medium-run expectations of depreciation had to be positive, to satisfy arbitrage, and equilibrate domestic to foreign returns, the economies were susceptible to shocks. This together with financial market weaknesses explains the rapid collapse after mild external shocks. In monetary theories of exchange rate determination, the currency depreciates under excessive money growth. We demonstrate conditions under which an expected depreciation of the exchange rate can occur under low monetary growth. Tight money policy and a high revenue deficit kept our interest rates far above foreign and triggered an industrial recession in 1996-97, and a depreciation of the exchange rate. But during the onset of the southeast Asian crisis monetary policy had been relaxed. This helped India escape the crisis. Other implications of our analysis for Indian economic trends are explored.

Savings: A Clarificatory Note Ashima Goyal THERE is an ongoing debate in Economic and Political Weekly on the measurement of savings in India. We claborate on some issues that are relevant to this discussion, and point out a conceptual error in the treatment of foreign inflows in the national accounts statistics, After enumerating the reasons why household physical savings may well be underestimated, we use some simple macro- economic identities to clarify the effect of foreign inflows on savings in Section II. In Section III we see the ways in which these macro-economic concepts and identities can clarify measurement practice. Section IV uses the pattern in acquisition of gold in the 1990s to suggest that contrary to widespread belief, gold is purchased more for investment rather than for consumption, in India.

Savings: When Data Is Doubted Can Theory Help?
Ashima Goyal Simulations with a dynamic general equilibrium model indicate that there is some underestimation of savings in the 1990s, but at the same time there has been a fall in savings propensities. There are many ways in which foreign inflows impinge on savings. If they raise the rate of growth then savings do tend to be higher in periods of rapid growth. But in order to prevent an unsustainable accumulation of debt, it is essential to maintain high incentives for savings and investment, and provide new instruments for both. In the presence of the latter, mobility between income groups augurs well for a future rise in the Indian aggregate savings ratio.