Liberalized Exchange Rate Management System and Devaluation in India: Trade Balance Effect

( Rajat Acharyya ) 세종대학교 경제통합연구소 1994 Journal of Economic Integration Vol.9 No.4

This paper examines the short run trade balance effects of the recent exchange rate policies in India in terms of the extended Jones-Corden [1976] model. With rigidity of money wage rate as the target of concurrent fiscal policy, a change in the LERMS formula improves trade balance only if non-trade-ables are relatively labour-intensive. A devaluation might still fail to improve trade balance, on the other hand, in presence of imported input. The Jones-Corden condition thus gets modified in presence of imported input.

Consumer Targeting under Quality Competition in a Liberalized Vertically Differentiated Market

Rajat Acharyya 중앙대학교 경제연구소 2005 Journal of Economic Development Vol.30 No.1

This paper examines consumer targeting by cost-asymmetric home incumbent and foreign entrant under quality and price competition among them in a liberalized home-country market. With the home incumbent offering a price-quality menu before the foreign entrant offers his menu, the extent to which the home incumbent enjoys a home-market advantage over a technologically efficient foreign entrant determines the nature of market segmentation. When the home-market advantage is not too large, the home incumbent targets accommodates entry by targeting only the low-type home consumers. Gains from liberalization, however, depends to a large extent on the distribution of home consumers over different types.

INNOVATION UNDER THE THREAT OF DIRECT FOREIGN INVESTMENT

SOMA ROY;RAJAT ACHARYYA 경제연구소 2009 Journal of Economic Development Vol.34 No.1

We examine the implication of direct and indirect foreign competition on domestic innovation decision. In most of the existing theoretical analyses the foreign firms are assumed to enter the domestic-country market as an exporter and thus are subject to a tariff duty imposed by the local government. We consider a broader setting where the foreign firm also has the option of setting up a production unit in the domestic country to supply output to the domestic country. This enables it to avoid the tariff that it faces due to export. Once we allow for such a strategy option for the foreign firm, competition becomes more direct and intense since tariffs no longer discount for the technological inferiority of home firms. We show that innovation by the home firm will be discouraged at high tariffs under the threat of DFI. Again at low tariff rates exports by the foreign firm make market competition more intense and reduce the incentive for innovation. Hence the home firm always (never) innovates at low (high) R&D cost whatever be the tariff rate. For intermediate R&D cost the home firm innovates if the foreign firm opts for exports.

Does What Countries Export Matter? : The Asian and Latin American Experience

ANWESHA ADITYA;RAJAT ACHARYYA 경제연구소 2012 Journal of Economic Development Vol.37 No.3

The present paper examines the differences in growth performances of Asia and Latin America, in particular, the roles of trade and institutions in explaining the differential growth experiences of the two regions. In examining trade policy instruments as a plausible explanation of growth divergence, we have focused on the emerging pattern and composition of export baskets in the two regions and regional integration and accession to WTO. In a GMM dynamic panel estimation for the period 1975-2005, though it is found that diversification and composition of exports have significant impacts on economic growth in both the regions, diversification within the manufacturing sector is important for Asia only. The common determinants of growth in the two regions are exports, investment, public debt and human capital. On the other hand, the differentiating factors on the diverging growth experiences of Asia and Latin America are infrastructure, regional integration and institutional aspects like patent protection, and WTO.

DEVALUATION, EXPORT QUALITY AND EMPLOYMENT IN A SMALL DEPENDENT ECONOMY

SHRIMOYEE GANGULY,Rajat Acharyya 중앙대학교 경제연구소 2022 Journal of Economic Development Vol.47 No.1

This paper investigates how currency devaluation by a small open economy affects its export quality when higher qualities are intensive in domestic factors like skilled labour and capital, rather than on imported input; and the ramifications of such quality changes on employment of unskilled labour and real income or welfare of the economy. In a competitive general equilibrium structure with cost of export quality determined endogenously, changes in export quality is shown to be contingent upon whether higher quality is more skill intensive or more capital intensive. Thus, across-the-board devaluation will have asymmetric impact on the quality choice of export goods that differ in relative skill or capital requirement for quality improvement. However, aggregate employment of unskilled labour rises unambiguously under homothetic taste, and under reasonable conditions under non-homothetic tastes. These results qualify several robustness checks.

INNOVATION UNDER THE THREAT OF DIRECT FOREIGN INVESTMENT

SOMA ROY,RAJAT ACHARYYA 중앙대학교 경제연구소 2009 Journal of Economic Development Vol.34 No.1

We examine the implication of direct and indirect foreign competition on domestic innovation decision. In most of the existing theoretical analyses the foreign firms are assumed to enter the domestic-country market as an exporter and thus are subject to a tariff duty imposed by the local government. We consider a broader setting where the foreign firm also has the option of setting up a production unit in the domestic country to supply output to the domestic country. This enables it to avoid the tariff that it faces due to export. Once we allow for such a strategy option for the foreign firm, competition becomes more direct and intense since tariffs no longer discount for the technological inferiority of home firms. We show that innovation by the home firm will be discouraged at high tariffs under the threat of DFI. Again at low tariff rates exports by the foreign firm make market competition more intense and reduce the incentive for innovation. Hence the home firm always (never) innovates at low (high) R&D cost whatever be the tariff rate. For intermediate R&D cost the home firm innovates if the foreign firm opts for exports.

DOES WHAT COUNTRIES EXPORT MATTER? THE ASIAN AND LATIN AMERICAN EXPERIENCE

ANWESHA ADITYA,RAJAT ACHARYYA 중앙대학교 경제연구소 2012 Journal of Economic Development Vol.37 No.3

The present paper examines the differences in growth performances of Asia and Latin America, in particular, the roles of trade and institutions in explaining the differential growth experiences of the two regions. In examining trade policy instruments as a plausible explanation of growth divergence, we have focused on the emerging pattern and composition of export baskets in the two regions and regional integration and accession to WTO. In a GMM dynamic panel estimation for the period 1975-2005, though it is found that diversification and composition of exports have significant impacts on economic growth in both the regions, diversification within the manufacturing sector is important for Asia only. The common determinants of growth in the two regions are exports, investment, public debt and human capital. On the other hand, the differentiating factors on the diverging growth experiences of Asia and Latin America are infrastructure, regional integration and institutional aspects like patent protection, and WTO.

TARIFF REDUCTIONS, TERMS OF TRADE AND PRODUCT VARIETY

Anwesha Aditya,RAJAT ACHARYYA 중앙대학교 경제연구소 2016 Journal of Economic Development Vol.41 No.3

In a two-country synthesis model we examine implications of a tariff reduction on the gains at extensive margin and the diversification of export basket through development of new varieties of a horizontally differentiated good. Through its resource allocation effect, the tariff reduction raises the number of varieties produced and exported by the Home country if the differentiated good is relatively labour intensive. Though, the worsening of terms of trade (TOT) consequent upon the tariff reduction has a dampening effect, overall, the number of varieties increases. The number of varieties produced and exported by the Foreign country, on the other hand, falls which makes the overall variety gains or gains at the extensive margin due to tariff reduction ambiguous.