ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

OutputSubscribe to Output

Theoretical Analysis of ‘Demonetisation’

With the aid of simple theoretical tools used in classroom lectures, the implications of the recent “demonetisation” exercise in India are analysed. It lends support to conclusions reached by other authors on the impact of demonetisation with the aid of available data. Following Robert Lucas’s Nobel lecture, the merits of economic policies that assume the form of random shocks to an economic system are questioned.

Oil Price, Exchange Rate and the Indian Macroeconomy

General discussions on the Indian macroeconomy have centred on two things in the recent past: the impact of depreciation of rupee and the effects of falling world oil prices. Using the structural vector autoregressive approach, the dynamic relationship between movements in oil prices and exchange rates with macroeconomic variables like price, output, interest rate and money are investigated. Additionally, a comparative analysis is conducted to show how each of these structural shocks has historically affected price, output and exchange rate. The results show strong link among these variables. Three results have important policy implications: (i) the world price of oil has a great potential to affect India's output, (ii) targeting depreciation of rupee to expand output may not be an effective policy tool for the RBI, and (iii) variation in rupee's value can have medium- to long-term impact on world price of oil.

Impact of Increase in Oil Prices on Inflation and Output in India

This paper attempts to study the transmission mechanism of an increase in petroleum prices on the prices of other commodities and output in India. The paper also examines the nature and the extent of 'feedback' in such a transmission mechanism and obtains evidence of bidirectional causality between oil and non-oil inflation in India.
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