Economy

Vol VIII, No 1 JANUARY 6, 1973

The Sri Lankan peoples’ calls for change cannot be set aside with quick economic fixes.

This study examines both the short- and long-run impact of public debt on the economic growth of Uttar Pradesh during the post-reform period of 30 years by employing the vector error correction model. The empirical analysis revealed that the increase in public debt-to-gross state domestic product ratio and interest payments burden would have an adverse impact on the long-run economic growth of UP, while having no significant impact on the short-run growth. It is also notable that the effective interest rate has negatively correlated with the gross capital formation in UP, and the latter has shown significant positive long-run association with the economic growth. In order to attract investments and economic growth, the state Government of UP should continue a countercyclical fiscal stance that would help in adhering to fiscal sustainability rules by smoothing out the repercussions of the COVID-19 pandemic.

Development, Distribution, and Markets edited by Kaushik Basu, Maitreesh Ghatak, Kenneth Kletzer, Sudipto Mundle and Eric Veerhoogen, New Delhi: Oxford University Press, 2021; pp vii + 328, `1,495.

Public borrowing is essential to garner resources to combat the current pandemic. The ability to do so and adhere to the standard norms of debt sustainability will be harder for developing economies as compared to the developed, due to constraints, both structural and policy-induced. High food infl ation and the adoption of infl ation targeting will impose severe constraints on the ability to expand borrowing and maintain low levels of debt-to-GDP. In such a situation, governments must either rethink monetary policy and/or allow for debt ratios to rise.