Is PMI Useful in Quarterly GDP Growth Forecasts for India? An Exploratory Note

This paper examines the relationship between India’s quarterly overall GDP, manufacturing GDP and services GDP and the corresponding monthly data on overall manufacturing and services PMI for the period January 2006 to July 2014. The objective is to see if the two overall PMIs are related to the level and quarterly growth rate of overall GDP and its chosen components. Considering the quarterly time series nature of the data set, the HEGY equation of Hylleberg et al. (J Econom 44:215–238, 1990) extended by adding the PMI variables as exogenous regressors is used as the regression mode to relate a GDP level/growth rate variable to the two overall PMI variables. The results show that the three GDP level variables, but none of the GDP growth rate variables, have significant positive correlation with services PMI, but not with manufacturing PMI. Finally, the marginal effect of services PMI on manufacturing GDP level is found to be the largest, followed by that for overall GDP level and services GDP level.

     

Is Exchange Rate Volatility Symmetric to Oil Price Volatility? An Investigation for India

Journal of Quantitative Economics - The studies involving finding a relation between oil prices and the exchange rate have often looked the relationship when the oil price was rising. Will the...     

International Trade and Manufacturing Employment: Is India following the Footsteps of Asia or Africa?

The Indian manufacturing sector has rapidly increased its integration with the world economy since the 1991 trade reforms. We examine whether trade integration created or destroyed jobs in the Indian manufacturing sector, and compare India's employment outcomes with four other countries—Bangladesh, Kenya, South Africa, and Vietnam. We find that the impact of international trade on manufacturing employment seems to be similar to those found for the two African countries rather than the two Asian countries, a surprising result for a country with an apparent comparative advantage in labor-intensive manufacturing goods, and a large excess supply of unskilled labor.     

Is Talk Cheap?

For the steel import quota bill of 1999, each word in the Congressional Record costs $39 in campaign contributions from the steel industry. Consequently, our answer is "Yes, talk is cheap!"     

Is Happiness Infectious?

The paper uses an appropriate survey from rural China to answer the question: is happiness infectious, i.e. does the happiness of an individual depend positively on the happiness of his or her reference group? The evidence is consistent with this hypothesis, but the challenge is to solve the ‘reflection problem’, i.e. is the apparent effect of neighbours’ happiness on own happiness a causal one or merely a reflection? A ‘quasi‐panel’ approach is adopted, treating villages as groups and individuals as multiple observations within each group, and using an error components 2SLS estimator. The results suggest that the relationship might be largely causal. The normative and policy implications are briefly considered.     

Is polarization bad?

The adverse effects of political and social polarization on government policies are empirically well documented, yet some democracies seem to cope well or even benefit from diversity. In this paper we develop a theoretical model to show how elections in polarized societies contribute to improve quality of government. We consider both polarization among citizens and political actors (political polarization), where the second is endogenously determined by parties competing to win the support of the majority of voters. We find that more heterogeneous societies are more likely to be politically polarized, but that the divergence of positions in the political arena helps the electorate control government corruption by raising electoral stakes. Our results, which are consistent with the findings of a substantial empirical literature, suggest that, when funneled into political competition, polarization may help improving quality of government and policies.     

Is piracy sustainable?

We develop a model of international trade between three countries, one of which hosts pirates. When the number of pirate ships increases, the probability for one of the pirate ships (for one commercial ship) encountering a commercial (pirate) ship decreases (increases). Then, the commercial ships have an incentive to spend more on defence and pirate ships to invest less on attack. If pirates operate under free entry, they do not internalize the entry externality. Then, their number rises until it reaches a level such that their attack power has become negligible and the defence of the commercial ships has reached a high level. The economy settles in a full deterrence equilibrium. However, if the number of pirate ships is controlled by an authority, which maximizes piracy's profit, the economy settles in an equilibrium where piracy is active and commercial ships spend less on defence. Piracy is a substitute for trade. Piracy depends on the terms of trade of the pirate country and on the relative efficiency of the attack versus the defence.     

Is there a role for caste and religion in food security policy? A look at rural India

This paper finds that factors such as caste and religion influence food security at the regional level. Thus defining affirmative action within food security programs may be necessary as the current practice of designing food security programs around the poverty line is shown to deliver limited results. In this regard, another lack of consideration is region-specific analysis within the rural areas which shows varied influence, thereby cautioning against a ‘one size fits all’ general policy of the central government. Evidence also shows that socio-economic factors and social assistance programs had different impacts on calorie gap depending on one's nutritional status. This nonlinear relationship has been neglected in most studies on food security and thus raises doubt on past assessment and policy implications.     

Caste at Birth? Redefining Disparity in India

Using household information in the National Family and Health Survey (NFHS) 1992/93 data, this paper examines regional variations in intercaste disparity in India. Based on five variables that are indicators of the standard of living of the three major caste/tribe groups identifiable in the data, a "caste deprivation index" is constructed that can be reversed to read as a "caste development index." Mapping the regional variation in this index, the paper makes a plea for focusing on caste as an essential ingredient in the study of stratification patterns in India's population.     

Is assortative matching efficient?

Summary. This paper develops some general conditions under which complementarities between individual agents imply that assortative matching is efficient. Our analysis has four main findings. First, when agents are organized into equal-sized groups, just as in Becker (1973), the presence of within-group complementarities is sufficient for stratification to be efficient. Second, if group sizes vary, assortative matching may not be efficient even though complementarities are present, unless particular functional form assumptions are imposed. Third, the connection between assortative matching, complementarities and efficiency reemerges if one considers sequences of replications of the economy in which individual coalitions are uniformly bounded in size. Fourth, the presence of feedbacks from the composition of group memberships has important effects on efficient allocations and breaks any simple link between assortative matching and efficiency. Together, these results suggest that the characterization of the cross-section evolution of an efficiently sorted economy is likely to be highly complex. Received: September 25, 2001; revised version: February 26, 2002 RID="*" ID="*" We thank William Brock for many helpful conversations and Scott Page for detailed comments on an earlier draft of this paper. The National Science Foundation, John D. and Catherine T. MacArthur Foundation and Center for Urban Land Economic Research have generously provided financial support. Correspondence to: S. N. Durlauf     

Is firm-sponsored education viable?

This paper challenges the commonly-held human capital assumption that profit-maximizing firms cannot invest in their employees' general training. We argue that general training is provided to equilibrate a hostage-type relationship that exists when firms and workers share investments in specific training, and that the firm's investment in general training is not necessarily subject to poaching hazards. We then test the viability hypothesis empirically, using data from a longitudinal survey of natural and social scientists and engineers. Our results suggest that (1) firm investments in general training programs are not necessarily paid for by foregone earnings, and (2) turnover rates do not rise as a function of firm-sponsored general training. These results are discussed in terms of the current policy debate over corporate education expenditures.     

Is institutional improvement possible?

A substantial literature shows that economic prosperity is dependent on the quality of economic institutions. Countries with low-quality institutions remain poor while countries with high-quality institutions prosper. Improvement in institutional quality brings with it economic growth. Poor countries must improve their economic institutions to escape poverty; so, if a poor country’s institutional structure is unlikely to improve, that suggests dismal prospects for economic growth and an escape from poverty. An examination of institutional quality over 30 years indicates that countries with low-quality institutions have improved their institutional quality, which demonstrates that poor countries are not stuck with low-quality institutions. They can improve their institutions, and consequently, can generate economic growth and escape poverty.