Are Indian rice exporters able to price discriminate? Empirical evidence for basmati and non-basmati rice

The role of exchange rate fluctuations on the pricing behaviour of Indian rice exporters in their major destination markets is examined using the pricing-to-market (PTM) model. The analysis was undertaken in a context where India has emerged as a leading exporter of rice in the world market. The study distinguishes between basmati and non-basmati rice in the analysis as the destination markets differ across these two varieties. One of the key contributions of this study is that it undertakes an analysis under 3 exchange rate models, they are: nominal, real and commodity-specific exchange rates. The results from our analysis indicated the presence of non-competitive pricing behaviour of India’s rice exporters in majority of destination markets due to both the market-specific characteristics as well as exchange rate-induced effects. The amplification of exchange rate effects was more prominent in commodity-specific exchange rate model whereas local currency stabilization was more prominent under nominal and real exchange rate models. Furthermore, the analysis showed that the commodity-specific exchange rate better predicts the PTM behaviour of rice exporters.     

Information dynamics effects from major world markets to SAARC nations

This paper investigates the impact of major world equity markets on four founding countries of the South Asian Association for Regional Cooperation (SAARC). With a population of 1.47 billion, SAARC is the largest regional organization in the world. However, the issue of global integration of equity markets of the SAARC nations has largely been ignored. This study fills this important gap, adding results towards the ongoing debate concerning the issue of global market integration. After the onset of the financial crises of 2008, this issue is imperative. VAR analysis is used to determine whether there is any dependency of SAARC return on the performance of world equity markets. Further, GARCH-in-mean modeling is used to determine whether there is any evidence of Volatility spillover. It is found that volatility in major world markets do not impact returns in SAARC nation, but ample evidence of volatility spillover is found for India, Bangladesh and Sri Lanka. Similar results are not obtained for Pakistan.     

Pricing to market behaviour of India's high value agri‐food exporters: an empirical analysis of major destination markets

The pricing behaviour of India's high value agricultural and food exporters in their major destination markets is examined using a pricing‐to‐market (PTM) model for noncompetitive and exchange rate related pricing behaviour. The analysis was undertaken in a context where India is showing high commodity concentration in agricultural trade. The econometric analysis employed is panel corrected standard errors (PCSE) estimation technique. The results indicated evidence of a greater degree of imperfect competition either through price discrimination across destinations or through imperfect exchange rate pass‐through. The analysis of exchange rate effects showed that the local currency price stabilization by the Indian exporters were more prominent than the amplification of exchange rates. The analysis of the asymmetric effects of exchange rates on export prices showed that in most cases the depreciation of Indian rupee had a greater impact than the appreciation. Moreover the results showed that the exchange rate pass‐through is sensitive to the kind of exchange rate index utilised. In our analysis we found that the commodity specific exchange rate better predicts the pricing to market behaviour in most cases.