Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 231-253, August–November 2022.
This study analyses an important policy issue pertaining to the public debt and external debt of BRICS nations from 1993 to 2020 using the Bohn framework and a penalised-spline estimation method. It also checks the robustness of the results using the ADF and co-integration tests. The results indicate that as the primary surplus reacts positively and significantly to public debt in China and South Africa, the debt is sustainable in these nations. In Brazil, India and Russia, the debt is not sustainable. The external debt policy is sustainable only in China and not in other BRICS nations. These results suggest the need for immediate policy interventions in Brazil, India and Russia to achieve sustainable levels of public debt and external debt. We hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to improve the public debt and external debt position of BRICS nations and to make them sustainable.JEL Codes: H63, C23, D72, E62, H72
What Role Does EPL Play in Wage Determination under Segmented Labour Markets? A State-level Analysis from India’s Formal Manufacturing Sector
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 327-366, August–November 2022.
This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation.JEL Codes: J21, K31
This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation.JEL Codes: J21, K31
Is the Willingness to Take Risks a Credential for Being a Model Farmer?
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 433-452, August–November 2022.
Despite the significant role of model or demonstrator farmers in disseminating new technologies, systematic and empirical examination of the behavioural characteristics that distinguish demonstrator farmers from other farmers is lacking. Understanding the characteristics of demonstrator farmers is as important as the characteristics of the technology or practice being demonstrated in model farms. Thus, this article examines whether attitudes to risks distinguish demonstrators from non-demonstrator farmers. The results show that a larger proportion of demonstrator farmers will take risks as compared to non-demonstrators. The results also indicate that being less risk-averse increases the chances of being a demonstrator farmer. The implication is that while demonstrators tolerate the risks that accompany adopting technologies, the reverse could be the case for non-demonstrator farmers. Crucially, this finding will inform the decision-making of extension agents when choosing demonstrator farmers. This article will also serve as evidence for future programmes not to rely wholly on demonstrator farmers as the decisively indicative test of farmers’ overall risk attitude.JEL Codes: D81, C9, Q12
Despite the significant role of model or demonstrator farmers in disseminating new technologies, systematic and empirical examination of the behavioural characteristics that distinguish demonstrator farmers from other farmers is lacking. Understanding the characteristics of demonstrator farmers is as important as the characteristics of the technology or practice being demonstrated in model farms. Thus, this article examines whether attitudes to risks distinguish demonstrators from non-demonstrator farmers. The results show that a larger proportion of demonstrator farmers will take risks as compared to non-demonstrators. The results also indicate that being less risk-averse increases the chances of being a demonstrator farmer. The implication is that while demonstrators tolerate the risks that accompany adopting technologies, the reverse could be the case for non-demonstrator farmers. Crucially, this finding will inform the decision-making of extension agents when choosing demonstrator farmers. This article will also serve as evidence for future programmes not to rely wholly on demonstrator farmers as the decisively indicative test of farmers’ overall risk attitude.JEL Codes: D81, C9, Q12
The Influence of Perceived Role of Government on Energy Efficiency Improvement: Evidence from Manufacturing Firms in Malaysia
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 309-326, August–November 2022.
Energy efficiency improvement is one of the effective strategies to attain energy sustainability. Firms’ perceptions and attitudes towards energy efficiency improvement have come to be seen as vital in the supply and demand management of energy. This research aims to examine the influence of perceived role of government on manufacturing firms’ intentions to improve energy efficiency. Data were collected from a survey, and the research model was empirically tested. Results from the empirical analysis show that perceived role of government significantly influenced manufacturing firms’ intentions to improve energy efficiency. In addition, the results indicate that there was a significant mediating effect of attitude towards energy efficiency improvement on the relationship between perceived role of government and manufacturing firms’ intentions to improve energy efficiency. Several notable policy implications can be drawn from the research results.JEL Codes: D22, L60, Q48
Energy efficiency improvement is one of the effective strategies to attain energy sustainability. Firms’ perceptions and attitudes towards energy efficiency improvement have come to be seen as vital in the supply and demand management of energy. This research aims to examine the influence of perceived role of government on manufacturing firms’ intentions to improve energy efficiency. Data were collected from a survey, and the research model was empirically tested. Results from the empirical analysis show that perceived role of government significantly influenced manufacturing firms’ intentions to improve energy efficiency. In addition, the results indicate that there was a significant mediating effect of attitude towards energy efficiency improvement on the relationship between perceived role of government and manufacturing firms’ intentions to improve energy efficiency. Several notable policy implications can be drawn from the research results.JEL Codes: D22, L60, Q48
A Single Measure of Overall Export Performance
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 278-308, August–November 2022.
Exports are a lifeline to a country’s growth, and an overall index can describe its export performance. However, there is little evidence of a single measure encompassing all the relevant aspects of exports. A composite and multi-dimensional measure can aid in assessing the relative position of a country in the world list and identifies necessary policy interventions. The article proposes an Overall Export Performance Index that satisfies the principles of index formation—monotonicity, time reversal, robustness and an unbiased approach. The proposed index avoids selecting weights and scaling variables. It facilitates the identification of crucial indicators requiring the attention of policymakers, tracking the progress of a country across time and the computing of mean and variance of the index for a group of countries at a given time. An empirical comparison of the USA and India reveals that India registered better overall export performance than the USA from 2015 to 2018. The results suggest India’s need for reforms in existing foreign trade policies.JEL Codes: F1, F10, F13
Exports are a lifeline to a country’s growth, and an overall index can describe its export performance. However, there is little evidence of a single measure encompassing all the relevant aspects of exports. A composite and multi-dimensional measure can aid in assessing the relative position of a country in the world list and identifies necessary policy interventions. The article proposes an Overall Export Performance Index that satisfies the principles of index formation—monotonicity, time reversal, robustness and an unbiased approach. The proposed index avoids selecting weights and scaling variables. It facilitates the identification of crucial indicators requiring the attention of policymakers, tracking the progress of a country across time and the computing of mean and variance of the index for a group of countries at a given time. An empirical comparison of the USA and India reveals that India registered better overall export performance than the USA from 2015 to 2018. The results suggest India’s need for reforms in existing foreign trade policies.JEL Codes: F1, F10, F13
The Impact of FTA on Trade Volume and Terms of Trade between Pakistan and China
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 392-432, August–November 2022.
The primary purpose of this study is to examine the impact of free trade agreements on trade volume and terms of trade between Pakistan and China. It examines the effect of the Pakistan–China Free Trade Agreement (PCFTA) on sector-wise trade welfare for both countries. Using the model of Lloyd and Maclaren, this study has quantified the trade welfare effect for both countries through trade volume, intra-union terms of trade and extra-union terms of trade in the context of PCFTA. The study concludes that the trade welfare increases for China and decreases for Pakistan after the complete execution of PCFTA. Also, there has been a trade creation for China and trade diversion for Pakistan by the PCFTA.JEL Codes: F15, F10, F13, I30, F60, F02
The primary purpose of this study is to examine the impact of free trade agreements on trade volume and terms of trade between Pakistan and China. It examines the effect of the Pakistan–China Free Trade Agreement (PCFTA) on sector-wise trade welfare for both countries. Using the model of Lloyd and Maclaren, this study has quantified the trade welfare effect for both countries through trade volume, intra-union terms of trade and extra-union terms of trade in the context of PCFTA. The study concludes that the trade welfare increases for China and decreases for Pakistan after the complete execution of PCFTA. Also, there has been a trade creation for China and trade diversion for Pakistan by the PCFTA.JEL Codes: F15, F10, F13, I30, F60, F02
Evaluating the Long-run Sustainability of India’s Fiscal Management with Structural Change
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 367-391, August–November 2022.
Amidst output moderation, rising deficits and increasing debt, India’s macro-fiscal arithmetic witnesses severe strain and often invites downward rating pressures by sovereign rating agencies. The article aims to examine India’s fiscal sustainability during the past four decades employing time series integration and cointegration techniques, with structural breaks in a sequential schematic framework under intertemporal government budget constraints. It examines stationarity with exogenous and endogenous structure breakpoint(s) at the level and slope for government revenue and expenditure data-generating process following Narayan and Popp (2010), Lee and Strazicich (2003), Zivot and Andrews (1992) and Perron (1989). Furthermore, the cointegration vectors of these fiscal variables in Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and a generic cointegration framework following Gregory and Hansen (1996) with structural shifts confirm the sustainability of India’s fiscal management. However, a less-than-unity estimate of the DOLS cointegrating slope parameter with few exogenous breakpoints signifies a weak form of sustainability and hence emphasises a credible commitment to fiscal consolidation going forward for India.JEL Codes: C32, H50, E62, H62
Amidst output moderation, rising deficits and increasing debt, India’s macro-fiscal arithmetic witnesses severe strain and often invites downward rating pressures by sovereign rating agencies. The article aims to examine India’s fiscal sustainability during the past four decades employing time series integration and cointegration techniques, with structural breaks in a sequential schematic framework under intertemporal government budget constraints. It examines stationarity with exogenous and endogenous structure breakpoint(s) at the level and slope for government revenue and expenditure data-generating process following Narayan and Popp (2010), Lee and Strazicich (2003), Zivot and Andrews (1992) and Perron (1989). Furthermore, the cointegration vectors of these fiscal variables in Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and a generic cointegration framework following Gregory and Hansen (1996) with structural shifts confirm the sustainability of India’s fiscal management. However, a less-than-unity estimate of the DOLS cointegrating slope parameter with few exogenous breakpoints signifies a weak form of sustainability and hence emphasises a credible commitment to fiscal consolidation going forward for India.JEL Codes: C32, H50, E62, H62
Decoding the Variations in the Female Labour Supply in Rural India: Empirical Evidences Based on Previous NSSO Datasets
The Indian Economic Journal, Volume 71, Issue 5, Page 878-894, October 2023.
The female labour force participation rate (LFPR) in India has been persistently declining and has exhibited an unusual pattern over the years, which deviates from the discourse of a U-shaped relationship between female LFPR and economic growth. The article is an attempt to provide some of the empirical foundations to the female LFPR in rural India, and further delves into a comprehensive understanding of the effects of different factors like household, social, economic and personal factors, empirically through previous NSSO data sets. The data sets used in the study are from NSSO 50, that is, from 1993-94 to NSSO 66, that is, 2009-10, to ascertain the factors that were significant over the years in determining the female LFPR in rural areas. These variables were tested to gain an understanding on the variations in female labour supply in rural India. Being cognisant and by problematising some of the significant factors that affected the female LFPR in the past, the article demands the state to exercise policies beyond its neoliberal framework and the ‘Keynesian welfare-state’ model of ‘superficial’ social security. Methodologically, three models were further created based on the NSSO 66 data set to showcase the perennial discouraged-worker effects among the females in LFPR in rural India. The article further empirically tests Jacob Mincer’s theory: ‘substitution effect dominating the income effect’ in the decision of females entering the labour market in rural India and shows empirically how it does not hold in the Indian context, thereby an attempt on debunking the mainstream theory.JEL Codes: J10, J21, J64, C18
The female labour force participation rate (LFPR) in India has been persistently declining and has exhibited an unusual pattern over the years, which deviates from the discourse of a U-shaped relationship between female LFPR and economic growth. The article is an attempt to provide some of the empirical foundations to the female LFPR in rural India, and further delves into a comprehensive understanding of the effects of different factors like household, social, economic and personal factors, empirically through previous NSSO data sets. The data sets used in the study are from NSSO 50, that is, from 1993-94 to NSSO 66, that is, 2009-10, to ascertain the factors that were significant over the years in determining the female LFPR in rural areas. These variables were tested to gain an understanding on the variations in female labour supply in rural India. Being cognisant and by problematising some of the significant factors that affected the female LFPR in the past, the article demands the state to exercise policies beyond its neoliberal framework and the ‘Keynesian welfare-state’ model of ‘superficial’ social security. Methodologically, three models were further created based on the NSSO 66 data set to showcase the perennial discouraged-worker effects among the females in LFPR in rural India. The article further empirically tests Jacob Mincer’s theory: ‘substitution effect dominating the income effect’ in the decision of females entering the labour market in rural India and shows empirically how it does not hold in the Indian context, thereby an attempt on debunking the mainstream theory.JEL Codes: J10, J21, J64, C18
Gravity Model Approach: An Empirical Application with Implications for BRICS Countries
The Indian Economic Journal, Ahead of Print.
This article aims to identify the main determinants of annual export flow among BRICS countries through the estimation of panel data from 1992 to 2018. The estimated results suggest that gross domestic product (GDP) and trade openness among other factors can explain export flow among BRICS countries. The most important finding of the study is that the formation of BRICS has exercised a negative and significant impact on bilateral trade among member countries. This study also found that the intra-industry trade dominates the intra-BRICS trade. Finally, the study found that the geographical distance between countries might be a factor for impeding trade among member countries. Thus, this study highlights the importance of increasing economic cooperation among these countries in terms of developing infrastructure, signing of free trade agreement (FTA) and increasing people-to-people contacts.JEL Codes: F00, F15, C23, F13
This article aims to identify the main determinants of annual export flow among BRICS countries through the estimation of panel data from 1992 to 2018. The estimated results suggest that gross domestic product (GDP) and trade openness among other factors can explain export flow among BRICS countries. The most important finding of the study is that the formation of BRICS has exercised a negative and significant impact on bilateral trade among member countries. This study also found that the intra-industry trade dominates the intra-BRICS trade. Finally, the study found that the geographical distance between countries might be a factor for impeding trade among member countries. Thus, this study highlights the importance of increasing economic cooperation among these countries in terms of developing infrastructure, signing of free trade agreement (FTA) and increasing people-to-people contacts.JEL Codes: F00, F15, C23, F13
Impact of Institutional Factors on the Long-run Behaviour of Money Velocity in India
The Indian Economic Journal, Ahead of Print.
The objective of the study is to examine the impact of institutional changes in the financial sector on the long-run behaviour of broad money velocity in India. For this purpose, annual time series data from 1970–1971 to 2019–2020 has been used. To avoid the problem of multicollinearity, three institutional factors (urbanisation ratio, ratio of total deposits to currency and DCPS) have been combined to form an institutional factor index using PCA. The unit root results indicate that variables are a mix of I(0) & I(1), therefore, ARDL-ECM methodology is applied. Results indicate that money velocity exhibits a structural break in 2008, conforming to the global economic crises. To examine the impact of institutional factors a benchmark model (BM) containing per capita GDP and rate of interest has been estimated along with an institutional factors model (IFM) which also contains institutional factors index. The results show that there is no co-integration in BM, whereas co-integration was established in IFM. The error-correction term and institutional factors index were highly significant for IFM, confirming the long-run relationship. The explanatory power (adjusted R2) for IFM was considerably higher than BM, indicating that the addition of institutional variables significantly improves the money velocity model for India.JEL Codes: C32, E41, E52
The objective of the study is to examine the impact of institutional changes in the financial sector on the long-run behaviour of broad money velocity in India. For this purpose, annual time series data from 1970–1971 to 2019–2020 has been used. To avoid the problem of multicollinearity, three institutional factors (urbanisation ratio, ratio of total deposits to currency and DCPS) have been combined to form an institutional factor index using PCA. The unit root results indicate that variables are a mix of I(0) & I(1), therefore, ARDL-ECM methodology is applied. Results indicate that money velocity exhibits a structural break in 2008, conforming to the global economic crises. To examine the impact of institutional factors a benchmark model (BM) containing per capita GDP and rate of interest has been estimated along with an institutional factors model (IFM) which also contains institutional factors index. The results show that there is no co-integration in BM, whereas co-integration was established in IFM. The error-correction term and institutional factors index were highly significant for IFM, confirming the long-run relationship. The explanatory power (adjusted R2) for IFM was considerably higher than BM, indicating that the addition of institutional variables significantly improves the money velocity model for India.JEL Codes: C32, E41, E52