How Well Does the IS-LM Model Fit in a Developing Economy: The Case of India
AbstractThe IS-LM model, as a vehicle for policy analysis, has a substantial influence on the policy makers and academicians. Like the developed countries, the IS-LM framework remains important for students to learn in the developing countries because of the benefits it offers in clarifying their thinking about the implications for practical policy issues. The main purpose of this study is to examine how well the dynamic properties of the estimated model of India match to the theoretical predictions of IS-LM model. The purpose is accomplished through Structural Vector Autoregressive (SVAR) model by estimating variance decompositions and impulse response functions. Our model explicitly accounts for the variables included in core macroeconomic models developed in the Keynesian flavour and specifies identification scheme, which capture some features of the developing economies in general. Our findings support the advocates of the IS-LM model most often compared to critics of the model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Department of General Business, Southeastern Louisiana University in its journal The International Journal of Applied Economics.
Volume (Year): 2 (2005)
Issue (Month): 1 (March)
Structural vector autoregressive model; identification; adverse supply shock; IS shock; money demand shock; money supply shock;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral 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: (Dr. Yu Hsing).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.