This paper aims to present a chronology of Indian business cycles in the post-reform period. In India, earlier, macroeconomic shocks were about droughts and oil prices. Economic reforms have led to an interplay of a market economy, financial globalisation and decisions of private firms to undertake investment and hold inventory. This has changed the working of the business cycle and has raised concerns about business-cycle stabilisation. In the backdrop of these developments, the macroeconomics research agenda requires foundations of measurement about business-cycle phenomena. One element of this is the identification of dates of business-cycle turning points. This paper uses the growth-cycle approach to present the chronology of business cycles.
Phase Start End Duration Amplitude. Recession Q4 Q1 13 3.
Dating Business Cycles in India
Expansion Q1 Q2 17 2. Recession Q2 Q3 9 2. Expansion Q3 Q2 7 1. Recession Q2 Q4 6 0. October to March. This is again similar to our second period of reces.
Again, this. T able 4 shows the a verage amplitude and duration of phases recession and. The average duration of expansion is 12 quarters. In addition to report. Hall, This measure shows ho w diverse are the duration.
C V Expansion. D Expansion 2. C V Recession.
D Recession 2. D Expansion. D Expansion is the average duration of expansionary phases. A Expansion 2. T able 4 Summary statistics of GDP growth cycles. This table shows the summary statistics of growth cycle turning points. It shows the. The average amplitude of. CV in duration and amplitude across expansions and recessions. The diversity in duration of.
The diversity in amplitude of expansion is 0. This implies that some episodes of. Expansion 2. Recession 2. A Recession 2. A Expansion.
A Expansion is the average amplitude of expansionary phases. T able 4 shows that the div ersity in duration of recessions and expansions. This implies that. The average duration of phases is found be. Mohant y. Recessions are characterised by. Dua and Banerji using the. One plausible explanation for relatively shorter durations of phases. T able 5 Changing nature of Indian business cycle: Evidence from the liter.
This table presents a comparison of the av erage duration of expansion and recession re. It provides evidence of change in the nature of business cycle. This is in contrast to the relatively shorter. Reference time period Average duration Average duration. Mohanty 4 quarters 5 quarters. Dua and Banerji 5 quarters 6 quarters. T able 6 Change in U. S business cycles over time. This table reports the average duration of recession peak to troughexpansion trough.
S over three distinct. Consequently the cycles hav e become longer in as compared to Cycles Peak to T rough to Trough to Peak to. Do the characteristics of business cycles change o ver time? Table 6 shows. S business cycles ov er time. Comparing two dis. In recent decades, a num ber of emerging economies have undergone structural.
There is an. In a broader. Since most of these countries experienced. F or India, Ghate et al. While the volatility of macroeconomic variables in the post. In this section. This analysis cannot be p erformed using GDP since the quarterly series. In order to gain intuition into the c hanging nature. W e analyse the.
W e follow the same approach. We adjust the series for. NBER business cycle periodicity of years is used to extract the cyclical. T o the standardised cyclical comp onent of pre and post-reform. IIP, w e apply the dating algorithm by Bry and Bosc han T able 7 shows the a verage duration of expansions and recessions in the t wo.
Table sho ws that while expansions have become longer, reces. This table presents a comparison of the av erage duration of expansion, recession and. As a result. Reference time period Average duration Average duration Average duration. T able 8 Have the phases of cycles become more diverse over time? As an outcome, cycles. This analysis shows ov er time the duration of cycles.
T able shows. Some episodes of recession are.
Similarly there is considerable variation in the duration of expansion and re. Some are short-liv ed. This dimension of change is hid. Our analysis p oints to interesting. While the average cycle has be.
W e present a description of the c haracteristics of the business cycle turning. Using seasonally adjusted quarterly GDP.
The average duration of. In addition to rep orting evidence of change in the. In this section we present robustness c hecks to examine the sensitivit y of our. We perform two robustness c hecks. First, we chec k. T o do this, we. W e perform this check to test if cyclical components derived. Figure 4 and T able 9 shows the turning points in the. As discussed earlier. With quarterly data, the smo othing parameter is set priori to This enables comparison of.
It is noteworthy that broadly similar periods of recession Q1- Q1. A comparison of. Broadly similar periods of.
In India, earlier, macroeconomic shocks were about droughts and oil prices. Economic reforms have led to an interplay of a market economy, financial globalisation, and the decisions of private firms to undertake investment and hold inventory. This has changed the working of the business cycle. Apr 10, This paper aims to present a chronology of Indian business cycles in the post-reform period. In India, earlier, macroeconomic shocks were about droughts and oil prices. Economic reforms have led to an interplay of a market economy, financial globalisation and decisions of private firms to undertake investment and hold inventory. This has changed the working of the business cycle Cited by: 3. Dating business cycles in India Radhika Pandey Ila Patnaik 5th January, Abstract This paper presents a chronology of Indian business cycle in the post-reform period. The period before reforms primarily saw monsoon cycles. We nd three episodes of recession in the post-reform period: Q4 to Q1, Q2 to Q3, and Q2 to Q4. We.
In addition, some high frequency. Recession Q1 Q1 12 4. Expansion Q1 Q1 4 0. Recession Q1 Q4 3 0. Expansion Q4 Q4 12 2.
Recession Q4 Q4 4 2. Expansion Q4 Q3 3 1. Recession Q3 Q1 2 1. Expansion Q1 Q1 4 2. Recession Q1 Q1 12 2. This is attributed to the property. As an outcome some high frequency cycles are also extracted through. A visual inspection of the cyclical comp onent. W e turn to examine the turning points using some additional series that could. W e exclude. In contrast, the gov ernment sector. GDP excluding agriculture and excluding governmen t fo cuses. W e construct an in. We also exclude oil companies.
This is done as follows: For eac h pair of. T able 10 Dates of turning p oints in IIP: This table shows the business cycle chronology using IIP as the reference series. Recession Q2 Q3 13 2.
Expansion Q3 Q4 5 1. Recession Q4 Q1 5 1.
Expansion Q1 Q4 7 3. Recession Q4 Q2 6 5. Expansion Q2 Q1 7 3. Recession Q1 Q4 11 1. Tables 10, IIP as a reference. Q4 as periods of recession. These are broadly similar to the three p eriods. GDP excluding. These are al.
Firms net sales index yields Q Q4, Q4- Q3 and Q2 to Q4. These are broadly in conformity with the recession periods. On the whole, the robustness checks sho w that the chronology of recession is. This table shows the chronology of business cycle turning points using GDP excluding. The periods of recession: Q1.
Expansion Q1 Q2 5 0. Recession Q2 Q1 3 0. Expansion Q1 Q2 9 2. Recession Q2 Q3 9 3. The periods of recession Q2 to Q4, Q4 to Q3. Recession Q2 Q4 10 2. Expansion Q4 Q3 7 1. Recession Q3 Q4 5 0. Expansion Q4 Q4 8 1. Recession Q4 Q3 7 3. Expansion Q3 Q2 7 3.
Recession Q2 Q4 10 3. Credit growth Investmen t growth. Figure 5 shows the performance of key macroeconomic variables during the. The shaded portions show the period of. The year-on-year. The gro wth in IIP also shows a decline during the shaded periods of.
Level 1 CFA Economics: Understanding Business Cycles-Lecture 1
Similar trend is seen in credit growth and investmen t growth. The above analysis shows that the trends in standard indicators conform to.
Dating business cycles in india
A brief description of the macro-economic conditions during the periods of. To set the con text, we begin by. The decade of nineties : The decade of nineties saw far reaching chan ges. The Balance of Payments crisis in the early nineties. These led to a spurt in economic. Some of the key reforms in. Devaluation and transition to a mark et determined exchange rate.
Phased reduction of peak custom duties. Policies to encourage foreign direct and portfolio investmen t. Abolition of industrial licensing. Gradual liberalisation of interest rates. Against the backdrop of these reforms the external and real sector. T able 13 shows a spurt in growth in. GDP and its components in the initial post crisis years. GDP growth. Agriculture, industry and.
The existing literature on business-cycle measurement in India has been grounded in three approaches - the classical business cycle (Dua and Banerji, ), the growth cycle (Chitre,;Mall,)andthegrowthratecycle(DuaandBanerji,).Hatekar. Downloadable! This paper presents a chronology of Indian business cycle in the post-reform period. The period before reforms primarily saw monsoon cycles. We find three episodes of recession in the post-reform period: Q4 to Q1, Q2 to Q3, and Q2 to Q4. We find that the average duration of expansion is 12 quarters and the average Cited by: 3. the CEPR Euro Area Business Cycle Dating Committee establishes the chronology of recessions and expansions of Euro Area member countries. In India there have been some attempts at determining the chronology of business cycles (Dua and Banerji,File Size: KB.
Figure 6 shows. T able 13 Growth rate in GDP and its sectors. This table shows the growth rate in GDP and its sectors in the nineties. The table shows. Since a. GDP growth surged from 1.
The growth in GDP Industry reached its peak at GDP Agriculture also slowed down in the second half. The initial post crisis years saw a sharp growth. Export growth. The external debt indicators also witnessed.
The external debt stock to GDP ratio. The ratio of short-term debt to total debt declined. Gross domestic savings as a percent to GDP rose. Similarly gross domestic. GDP growth moderated to 4. Agriculture and industrial growth also slow ed down in Figure 6 shows a slump in industrial pro.
Figure 6 Industrial pro duction and exports in the nineties. The growth in both these variables witnessed a surge in the initial. Y oY Change Per cent. T able 14 External debt indicators in the nineties. This table shows the key external debt indicators in the nineties. One of the outcome of. The sto ck of external debt to GDP improv ed from Improvements are visible in other indicators of external debt such as ratio of. T able 15 Key macro-economic conditions in W e see a moderation in GDP growth.
Broadly, the savings rate exceeded the inv estment rate in this period. Annual GDP growth rate 7. The moderation in growth from The investmen t boom of the previous three years had built up. Another reason. The subsequent paragraphs present an o verview of the phases of ex. End to Q1 recession : Table 15 sho ws the performance of key. The ratio. With low priv ate investment demand, foreign inv estment w as.
However in the aftermath. On the whole, the macro-economic conditions were largely. But conditions began to look positive from onwards.
What triggered. F rom toRBI engaged in sterilised interven. In earlyit ran out of b onds. This perio d was marked b y.
Without steril. Sharma, Ram Sewak, You can help correct errors and omissions. See general information about how to correct material in RePEc. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: S. Siva Chidambaram. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here.
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These results are robust to the choice of filter and to the choice of the business-cycle indicator. These dates suggest that, on average, expansions in India are 12 quarters in length and recessions run for 9 quarters.
The paper offers evidence of change in the nature of cycles. Dates of business-cycle turning points are a critical input for academic and policy work in macroeconomics. The paper offers robust estimation of the business-cycle turning points in the post-reform period using contemporary techniques of cycle extraction.
This work helps lay the foundations for downstream macroeconomics research by academicians and policymakers. Pandey, R. Please share your general feedback. You can start or join in a discussion here. Visit emeraldpublishing.