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

Mehdi Raissi and Volodymyr Tulin

No 2015/161, 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: WP; export; price; product; elasticity; India; export demand; manufacturing; income and price elasticity; energy shortages; export demand equation; merchandise export data; goods export; volume indices; elasticity estimate; industries export; export demand function; export destination; income elasticity; disaggregated export datum; export basket; India's export basket; Exports; Export performance; Price elasticity; Personal income; Export prices; Global (search for similar items in EconPapers)
Pages: 16
Date: 2015-07-17
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Citations: View citations in EconPapers (4)

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