Department of Economics and Finance
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Item Measurement of Trade Costs, its Determinants and Trade Growth. Accounting for India with its Asian Trading Partners(ICPE, 2016-02) Arora, RahulGravity model of international trade established a fact that international trade of an economy is highly affected by the trade costs incurred locally and across borders. These costs are the difference between production cost of a traded commodity and its price paid by the ultimate buyers. The present study calculates the trade costs of Indian economy with its Asian trading partners. The study is developed in three stages: It measures the trade costs for India with its trading partners from the Asian region; it also estimates the determinants of trade costs by using the data on the available trade cost proxies; and thereafter, it decomposes the growth of Indian trade into the contribution of growth in income, the contribution of the decline in bilateral trade costs, and the contribution of the decline in multilateral resistance. It is found that the trade costs of India with all its Asian partners have declined throughout the whole study period (1995-2013). The decline in Indian trade costs was the highest in West Asia followed by Southeast Asia, East Asia, South Asia, and Central Asia. The variables, used as determinants of trade costs, namely: contiguity, distance, tariffs, non-tariff barriers, exchange rate, and port infrastructure, behaved according to the theoretical expectations. Furthermore, the decomposition of the growth of Indian trade with Asian partners revealed that the decline in the relative bilateral trade costs was the driving force of growth of Indian trade with all the Asian regions.Item Goods Trade Liberalization Under Canada-India FTA and Its Impact: Partial and General Equilibrium Analysis(Springer, 2017-12) Arora, RahulThis chapter uses the partial (SMART) and general equilibrium (GTAP) tools to assess and simulate the impact of complete trade liberalization of ‘All’ and ‘Specialized’ products’ between India and Canada under the proposed Canada-India free trade agreement (FTA).The simulation results obtained from both of the analyses (partial and general equilibrium analyses) indicate that India would invariably gain more (than Canada) in terms of welfare change and consumer surplus when ‘All’ or ‘Specialized’ products of Canada enters India in comparison with the scenario when Indian ‘Specialized’ and ‘All’ products enters Canada. This study recommends the reworking of benefits and costs associated with Canada-India FTA in the presence of WTO plus and extra provisions.Item Calculation of Ad Valorem Equivalents of Non-Tariff Barriers: A Case Study of 16 RCEP Countries(Springer, 2017-12) Arora, RahulThis chapter provides the calculation of ad valorem equivalents (AVEs) of nontariff barriers, particularly those barriers that increase both the time to import and the time to export goods between two trading partners. The calculation considers the example of 16 member countries of the proposed Regional Comprehensive Economic Partnership (RCEP) agreement. This chapter evaluates the impact of trade facilitation in RCEP countries on their bilateral trade flows and other macroeconomic variables. Using an econometric approach, sectorwide AVEs of the time to import and the time to export have been calculated through the estimation of an augmented version of the gravity model.Item Theoretical Exposition of Some Ex Ante Approaches to Assess the Proposed Trade Policy(Springer, 2017-12) Arora, RahulThis chapter explains the partial and general equilibrium approaches of evaluating proposed changes in trade policies. It discusses some of the empirical methods available in trade policy research that have been presented in earlier chapters. Advance references and online links are given for detailed reading. This chapter is very important for those readers who have initiated and planned their research in the field of empirical analysis of international trade policy issues. It will guide them in choosing appropriate methodology and acquiring data for their research work.Item Developments in International Trade Theory and Gravity Modelling(Springer, 2017-12) Arora, RahulThis chapter discusses advances in international trade theory and gravity modeling with an explanation of the reasons behind gains from trade. The changing pattern of trade over time has also changed the explanation of the emergence of gains from trade, which provides room for new trade theories. Initial theories of trade, known as traditional trade theories, explain the pattern of trade in terms of comparative advantage. But with the passage of time, the emergence of trade in intermediates and services has provided new reasons for trade and hence has led to the advent of new trade theories. This chapter will explain the different reasons behind international trade.Item Theorizing International Trade(Springer, 2017) Arora, RahulThis book discusses the developments in trade theories, including new-new trade models that account for firm level trade flows, trade growth accounting using inverse gravity models (including distortions in gravity models), the impact of trade liberalization under the aegis of regional and multilateral liberalization efforts of economies using partial and general equilibrium analysis, methodologies of constructing ad valorem equivalents of non-tariff barriers, volatility spillover effects of financial and exchange rate markets. The main purpose of the book is to guide researchers working in the area of international trade, especially focused on empirical analysis of trade policy issues by updating their knowledge on issues related to trade theory, empirical methods, and their applications. The book would prove useful for policy makers, academicians, and researchers.Item Relative benefits/losses of India aligning with RCEP and BRICS countries under the conjecture of free trade area in goods(UNESCAP, 2015) Arora, RahulThe present study works out the relative benefits/losses of India aligning with RCEP and BRICS member countries under the conjecture of free trade area in good trade only. The study uses partial (SMART model) and general equilibrium (GTAP model) tools for this assessment. The main focus in the study is to compare the benefits/losses to Indian economy associated with both policy scenarios. The results reveal that it would be beneficial for India to align with other RCEP member countries under the policy of free trade area in goods trade. If India wants to join BRICS FTA in the near future then it must negotiate for the entry of its own specialized products into their markets and in reciprocity, it should allow the entry of their specialized products in to the domestic market. The results are in favor to make free trade area between RCEP countries which is more beneficial for India in comparison to make BRICS FTA.Item Does the Indian Economy Support Wagner’s Law? An Econometric Analysis(Eurasian Journal of Business and Economics, 2010) Arora, RahulThe present study endeavors to examine the validity of Wagner’s Law in India over the period 1950/51 to 2007/08. Six versions of Wagner’s hypothesis given by different economists have been estimated which support the existence of long-run relationship between economic growth and growth of public expenditure. Two structural breaks have also been given to test the impact of structural changes in Indian economy on the growth of public expenditure. It has been found that the first structural break given for mild-liberalization period causes insignificant changes in the growth elasticity of public expenditure. However, the observed change in the elasticity due to the second phase of intensive liberalization is statistically significant. Nevertheless, the Wagner’s law is still supported during the intensive phase of liberalization given a significant fall in the elasticity. Empirical evidences regarding the short-run dynamics refute the existence of any relationship between the economic growth and the size of the government expenditureItem Do Countries form Convergence Clubs in the World?(IPE, 2011) Arora, RahulItem Assessment of the Proposed India-China Free Trade Agreement: A General Equilibrium Approach(Emerald, 2015-02) Arora, RahulThe present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general equilibrium framework.