Separating Shocks from Cyclicality in Indian Aggregate Supply

Published By: IGIDR on eSS | Published Date: March, 01 , 2015

An ongoing debate on the shape of the Indian aggregate supply curve (AS) raises interesting econometric and policy issues. Systematic steps were taken to improve the estimation. On adding better variable definitions, a positive slope got, but on using a better measure of supply-shocks the slope decreases in size. The result that the Indian Aggregare Ssupply curve is relatively flat, but subject to frequent shifts, suggests the output cost of disinflation can be high, but the way to moderate it is to address the factors causing shifts of the curve.

Author(s): Ashima Goyal, Shruti Tripathi | Posted on: Apr 02, 2015 | Views() | Download (661)

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