Economic Policy Uncertainty and Economic Growth in India

Bhagat, Sanjai; Ghosh, Pulak; Rangan, Srinivasan

doi:10.2139/ssrn.2246882

Cited by 58 publications

(53 citation statements)

References 7 publications

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“…The resulting policy-related economic uncertainty, which we refer to as economic policy uncertainty (EPU), may cost the overall economy millions of jobs, hold back the economic recovery or elicit the stock markets slumping. Over the past decades, substantial studies have been undertaken mainly focusing on the negative effects that EPU has on inflation, investment, employment and economic growth (Marcus, 1981;Bernanke, 1983;Dixit, 1989;Rodrik, 1991;Aizenman and Marion, 1993;Bloom et al, 2007;Bloom, 2009;Bhagat et al, 2013). However, a key connection that arises here is: if EPU does have significant impacts on these economic fundamentals, then it would also be expected to have real impacts on stock market performance.…”

Section: Introductionmentioning

confidence: 99%

“…Sum (2012b) shows that the changes in EPU negatively affect all stock market returns in the Euro zone, Croatia, Norway, Russia, Switzerland, Turkey and Ukraine. Bhagat et al (2013) document a negative correlation between the Bombay Stock Exchange (BSE) index and EPU in India. Economic conditions have also been taken into account to the effects of EPU on the performance of stock market, as EPU is an economically-important risk factor which commands a higher risk premium especially under bad economic conditions.…”

Section: Introductionmentioning

confidence: 99%

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The Causal Relationship Between Economic Policy Uncertainty and Stock Returns in China and India: Evidence from a Bootstrap Rolling Window Approach

Balcılar

Gupta

et al. 2015

Emerging Markets Finance and Trade

188

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This paper examines the causal link between economic policy uncertainty and stock returns in China and India, using bootstrap Granger full-sample causality test and sub-sample rolling window estimation. We use monthly data covering from 1995:02 to 2013:02 for China and 2003:02-2013:02 for India. The bootstrap full-sample Granger causality test suggests no evidence of any causality between economic policy uncertainty and stock returns for the two countries. However, taking structural changes into account, we assess stability of parameters of the estimated vector autoregressive (VAR) models. We find both the short-run and long-run relationships between economic policy uncertainty and stock return estimated using full-sample data are unstable over the sample period. This suggests that full-sample causality tests cannot be relied upon. We turn to propose a time-varying (bootstrap) rolling window approach to revisit the dynamic causal relationship between the two variables. Using a rolling window of 24 months, we do find that there are bidirectional causal relationships between stock returns and EPU for several sub-periods in China and India. However, the association between EPU and stock returns is, in general, weak for these two emerging countries. These findings have important implications for policy makers as well as investors.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Causal Relationship Between Economic Policy Uncertainty and Stock Returns in China and India: Evidence from a Bootstrap Rolling Window Approach

Balcılar

Gupta

et al. 2015

Emerging Markets Finance and Trade

188

View full text Add to dashboard Cite

show abstract

“…3 The main motivation arises from the fact that economic policy uncertainties may have greatly contributed to the recent long-swings trend and important instability of stock prices (Baker et al, 2012;Brogaard and Detzel, 2012). Major recent studies tackling this issue provide evidence that the increase in economic policy uncertainty is generally associated with a decline in stock returns and a rise in stock volatility (e.g., Ozoguz, 2009;Dzielinski, 2012;Pástor and Veronesi, 2012;Bhagat et al, 2013;Pástor and Veronesi, 2013;Antonakakis et al, 2013;Kang and Ratti, 2013). The study by Pástor and Veronesi (2012) also concludes on a negative relationship between stock market returns and government policy uncertainty as measured by the variance of policy changes.…”

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confidence: 99%

Are stock prices related to the political uncertainty index in OECD countries? Evidence from the bootstrap panel causality test

et al. 2015

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This study applies bootstrap panel causality, proposed by Kónya (2006), to investigate causal link between political uncertainty and stock price for seven OECD countries over the monthly period of 2001.01 to 2013.04. This modeling approach allows us to examine both the cross-sectional dependency and the country-specific heterogeneity. Our empirical results indicate that not all the countries are alike and that the theoretical prediction that stock prices fall at the announcement of a policy change is not always supported. Specifically, we find evidence of the stock price leading hypothesis for Italy and Spain, while the political uncertainty leading hypothesis cannot be rejected for the United Kingdom and the United States. In addition, the neutrality hypothesis was supported in the remaining three countries (Canada, France, and Germany), while the feedback hypothesis, however, is never found.

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“…Britain is not the only country focusing on India for commercial opportunity; there has been a major drive by European and other states to penetrate what is the world's second largest market with an economy currently registering around 6% growth, and an Indian middle class set to treble in numbers over the next 15 years, with significant impacts on disposable income levels (Ahmed, Kundu, & Peet, ). Indian domestic demand is expected to grow at a compound rate of 9.2% a year up to 2030, thus creating commercial opportunities for many sectors (Bhagat, Ghosh, & Rangan, ). Commercial opportunity is, of course, also intrinsic to broader geo‐strategic goals for both Indian global aspirations (Sikri, ) and south Asia strategy of many governments, including Britain's (Ogden, ).…”

Section: Introductionmentioning

confidence: 99%

Assembling geographies of diplomacy under neoliberalism

Jones

Clark

2017

Trans Inst British Geog

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There is an enormous gap in our understanding of the state's role in the construction of international markets. Specifically, diplomacy's position in the contemporary entanglement of state and markets has been overlooked. Increasingly, diplomacy's on‐going adaptation to support neoliberalism has led to diplomats operating in a “twilight world” between diplomacy and business. Using assemblage thinking, we investigate the codings, capacities and tendencies emerging in the social spaces of diplomatic possibility in this “twilight world”. Drawing on comprehensive empirical materials on the UK–India diplomatic relationship, we show how the material and expressive components of the UK Foreign Office assemblage are being deployed to champion state goals in global markets. We illustrate the ways in which diplomacy struggles in the name of the state's international competitiveness. In particular, we argue that these social spaces of possibility are structured by both diplomatic and business calculations that have the capacity to create new and unpredictable courses that render both an uncertainty and fuzziness to the agential interactions between assemblages.

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Economic Policy Uncertainty and Economic Growth in India

Cited by 58 publications

References 7 publications

The Causal Relationship Between Economic Policy Uncertainty and Stock Returns in China and India: Evidence from a Bootstrap Rolling Window Approach

The Causal Relationship Between Economic Policy Uncertainty and Stock Returns in China and India: Evidence from a Bootstrap Rolling Window Approach

Are stock prices related to the political uncertainty index in OECD countries? Evidence from the bootstrap panel causality test

Assembling geographies of diplomacy under neoliberalism

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