Today, the Reserve Bank of India releases Volume 42, No.2, 2021 of its Occasional Papers, a analysis journal containing contributions from its employees. This subject incorporates 4 articles and two e book opinions.
Articles:
1. Forecasting Food Inflation utilizing News-based Sentiment Indicators
Bhanu Pratap, Abhishek Ranjan, Vimal Kishore and Binod B. Bhoi study the utiliy of info content material in newspaper articles to foretell client value inflation in greens and meals in India. Using information gadgets on three key greens printed in main English dailies, specifically tomatoes, onions and potatoes (TOP) that contribute closely to volatility in each CPI meals and headline inflation in India, the authors make use of pure language processing (NLP) methods to assemble information-based mostly sentiment indices to seize value dynamics of TOP commodities. The examine finds an inverse relationship between the constructed information sentiment indices of TOP and corresponding month-to-month adjustments of their costs. Exploiting this characteristic to foretell client value inflation in greens and meals, the paper finds that including information-based mostly info within the type of information sentiments improves forecasting accuracy. The ahead-trying info content material embedded in information information, due to this fact, suggests a further supply of info for nowcasting and close to-time period forecasting of meals inflation in India.
2. Behavioural Equilibrium Exchange Rates in Emerging Market Economies
In this paper, Dirghau Keshao Raut assesses the equilibrium trade charges in rising market economies (EMEs) utilizing the Behavioural Equilibrium Exchange Rate (BEER) mannequin. Employing annual information from 1994-2020 for ten EMEs, the writer finds that the true efficient trade charge (REER) within the lengthy-run confirms the Balassa-Samuelson impact. An enchancment in internet phrases of commerce, internet international property place and a rise in rate of interest differentials vis-à-vis the US are discovered to trigger the REER to understand. An enhance in debt-GDP ratio is, nonetheless, discovered to depreciate the REER. The comparability of precise and time-various equilibrium REER ranges means that the REER is set by macroeconomic fundamentals and the extent of misalignment (overvaluation/undervaluation) often hovers inside a slender vary of +/- 3 per cent. Like most EMEs, India’s REER additionally recorded two-approach actions round its equilibrium worth. The noticed upward co-actions of precise and equilibrium REER in some EMEs like India and China present the productiveness pushed enhance in REER, which isn’t an indication of loss of exterior competitiveness.
3. India’s Innovation Ecosystem for Productivity-led Growth: Opportunities and Challenges
Siddhartha Nath, Sreerupa Sengupta and Sadhan Kumar Chattopadhyay spotlight the latest tendencies in Research and Development (R&D) expenditures within the main superior and rising market economies, together with India. They spotlight that India’s R&D expenditure as a share of GDP, a serious driver of innovation and productiveness development, is but to be at par with different main economies. Though the participation of business entities within the combination R&D actions has remained low in India as in comparison with different main international locations on the earth, the development has been on upward trajectory lately. The empirical mannequin utilizing a pattern of 21 international locations comprising each rising market and superior economies means that the mixture R&D exercise is positively related to higher establishments that promote competitors, higher safety to mental property and shareholders’ rights, larger transparency in reporting, and the efficacy of company boards. The nation’s absorptive capability, i.e., per capita earnings and participation in worldwide commerce are additionally discovered to be positively related to R&D expenditures.
4. Price Stickiness in CPI and its Sensitivity to Demand Shocks in India
Sujata Kundu, Himani Shekhar and Vimal Kishore study the diploma of value stickiness within the all India Consumer Price Index-Combined (CPI-C) by classifying merchandise degree information into totally different value-setting strategies. The authors assemble a Sticky Price Index and a Flexible Price Index and discover that headline inflation is primarily pushed by versatile value inflation, whereas inflation excluding meals and gas largely co-strikes with sticky value inflation. Further, utilizing a New Keynesian Phillips Curve (NKPC) framework and information from 2011:Q1-2019:This fall, the underlying relationship between the sticky value index and output hole is analysed and the outcomes are in contrast with the Phillips Curve estimates (PC) based mostly on headline CPI-C and the versatile value PC. Results reveal that the sticky value PC is way flatter, with the affect of output hole on inflation occurring with a major lag, thereby suggesting that it’s gradual to regulate to adjustments in financial slack.
Book Reviews:
This subject of the RBI Occasional Papers additionally incorporates two e book opinions:
1. Sreerupa Sengupta opinions the e book “Measuring Economic Growth and Productivity: Foundations, KLEMS Production Models and Extensions” edited by Barbara M. Fraumeni. This edited quantity is a tribute to Dale Jorgenson’s contributions to development accounting and brings collectively analysis works of academicians on the extension of KLEMS (Capital, Labour, Energy, Material and Services) manufacturing fashions. The e book supplies a complete perspective on productiveness, that ranges from an evaluation of commerce productiveness linkages, vitality and environmental points to fashions of welfare and human capital improvement.
2. Shruti Joshi opinions the e book “Foundations of Post-Schumpeterian Economics: Innovation, Institutions and Finance” written by Beniamino Callegri. The books revisits the Schumpeterian concept and covers varied vital features comparable to, financial improvement, innovation, capitalist disaster and business cycles. The e book additionally affords a philosophical interpretation of the Schumpeter’s concept by drawing insights from the works of Henry Bergson, a French thinker and Georgescu-Rogen, an economist.
(Yogesh Dayal)
Chief General Manager
Press Release: 2022-2023/1060
