Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu
Item Number: [J40]
Title: Liberalization Policy: ‘Fits and Starts’ or Gradual Change
in India
Abstract: In this paper we assess the impact of external economic
liberalization in India on the transmission of aggregate shocks. We
examine the relative importance of domestic and external shocks and capture
their feedback effects by estimating an eight variable vector autoregression
(VAR) model. We also test two propositions regarding the nature of
India's liberalization policy: 1) under intermittency (or ‘fits and starts’)
the transmission of aggregate shocks in the post-reform period is compared
with two pre-reform periods; and 2) under gradualism the transmission
of aggregate shocks over three consecutive episodes of economic reform are
compared. Our test first consists of a simple regression analysis using
output, interest rates, and prices for India and its world counterparts.
The analysis is extended to include dummy variables and distributed lags
method. Finally, we apply the recursive regression method and Chow-tests
to uncover breaks in the estimated parameters. The preponderance of
evidence suggests that India's liberalization policy has followed a continuous
and smooth path, at least since the mid 1970s.
Reference: Mohammed Ansari and Ira N. Gang, Liberalization
Policy: ‘Fits and Starts’ or Gradual Change in India, Comparative Economic
Studies, 41 (1999) 23-46.
Co-Author Information:
Mohammed Ansari
Albany State University, Georgia
Email: mansari@asurams.edu
Download: Pdf
version of paper.