Business Cycle Accounting of the Indian Economy

Abstract

Can we use neoclassical growth model to single out the important transmission channels through which primitives a¤ected the Indian economy and caused the remarkable growth of the period 1982 to 2002? In this paper, we answer the question by applying the new technique of business cycle accounting to the Indian economy. Business cycle accounting procedure is based on the idea that primitives a¤ect the economy through three possible channels: through changes in productivity, through changes in labor market frictions or through changes in investment market frictions. Our results show us that the primary conduit of policies that brought about signi…cant growth in India was productivity that registered an unprecedented increase particularly in the nineties. Our results further indicate that changes in labor market frictions and investment market frictions did not play a signi…cant role.

Accounting for Business Cycles

“…The business cycle accounting methodology has been used for many countries and time periods. For example, it has been used for Portugal by Cavalcanti (2007); for the economies of Brazil, Russia, India, and China by Chakraborty and Otsu (2013); for India by Chakraborty (2006); for the East Asian economies by Cho and Doblas-Madrid (2013); for the United Kingdom by Kersting (2008); for Japan by Kobayashi and Inaba (2006); for Asian economies by Otsu (2010); and for monetary economies by Sustek (2011) andBrinca (2013); and for a variety of countries by Brinca (2014).…”

Accounting for Business Cycles

“…The business cycle accounting methodology has been used for many countries and time periods. For example, it has been used for Portugal by Cavalcanti (2007); for the economies of Brazil, Russia, India, and China by Chakraborty and Otsu (2013); for India by Chakraborty (2006); for the East Asian economies by Cho and Doblas-Madrid (2013); for the United Kingdom by Kersting (2008); for Japan by Kobayashi and Inaba (2006); for Asian economies by Otsu (2010); and for monetary economies by Sustek (2011) and Brinca (2013); and for a variety of countries by Brinca (2014).…”

Accounting for the Role of Investment Frictions in Recessions

“…The bca method allows revealing the mechanisms through which fundamental processes drive economic fluctuations. Therefore, it is a methodology for determining the most promising kind of theories regarding the primary characteristics of economic fluctuations and has been used in many countries and periods (see, for example, Brinca (2013Brinca ( ) (2014), Cavalcanti (2007), Chakraborty and Otsu (2013), Chakraborty (2006), Cho and Doblas-Madrid (2013), Kersting (2008), Kobayashi and Inaba (2006), Otsu (2010), Rodríguez-López and Solís-García (2016), and Sustek (2011)). Brinca et al (2020) provide a summary of this literature.…”