ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Domestic Terms of Trade in a Three-Sector Framework

The domestic terms of trade issue in India has mostly been addressed by analysing the terms of trade between an "agriculture" and "industry" sector. An increasing share of the Indian GDP today however originates from a "third" service sector. The presence of a large service segment necessitates a switch from the two-sector to at least three-sector framework of terms of trade analysis. This paper estimates the terms of trade effect for these three domestic sectors across India and in 15 major state economies. The results confirm the crucial role played by services in determining the terms of inter-sectoral trade.

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