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Price and Income Elasticity of Indian Exports—The Role of Supply-Side Bottlenecks

Mehdi Raissi and Volodymyr Tulin

No 15/161, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates the short-term and long-run price and income elasticity of Indian exports, and investigates the role of supply-side bottlenecks in shaping India’s export demand relationship. We use disaggregated export volume data for 45 Indian industries over the period 1990-2013, as well as industry-specific international relative prices, for estimation. Our results indicate that Indian exports are sensitive to international relative-price competitiveness, world demand, and energy shortages. In addition, binding supply-side constraints (notably energy shortages) dampen price responsiveness in the short-term.

Keywords: India; Manufacturing; export demand, income and price elasticity, energy shortages, demand, supply, supply-side, price elasticity, income elasticity, Models with Panel Data, Country and Industry Studies of Trade, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2015-07-17
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Journal Article: Price and income elasticity of Indian exports—The role of supply-side bottlenecks (2018) Downloads
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