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Examining the Eco-Macroeconomic Performance Index of India: A Data Envelopment Analysis Approach

Author

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  • Mohanty, Ranjan Kumar

    (National Institute of Public Finance and Policy)

  • Sahoo, Biresh K.

    (Xavier Institute of Management, Bhubaneswar)

Abstract

The prime objective of the paper is to construct a robust macroeconomic performance (MEP) index of India using Data Envelopment Analysis (DEA) approach. Six major macro indicators, namely, economic growth, employment rate, terms of trade, inflation rate, fiscal deficit, and pollution are used to computeMEP and Eco-MEP index of the Indian economy from 1980-81 to 2015-16. Overall, both the MEP and Eco-MEP index scores have quite similar best performing years, worst performing years, and have also captured the major events that adversely affected the economy during the last 35 years. This shows that the trend in overall performance of Indian economy was better in the 1980s and the 1990s but has deteriorated after the 2000s. The ARDL Bounds Testing approaches to cointegration methods are used to test the robustness/utility of these indices. The estimated results find that MEP and Eco-MEP have a positive impact on private investment, negative effect on current account deficit (CAD), and positive impact on foreign investment inflows (FIIs) and foreign direct investment (FDI). Hence, the suggested composite MEP index is stable, robust and truly captures the economic performance of India.

Suggested Citation

  • Mohanty, Ranjan Kumar & Sahoo, Biresh K., 2017. "Examining the Eco-Macroeconomic Performance Index of India: A Data Envelopment Analysis Approach," Working Papers 17/202, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:17/202
    Note: Working Paper 202, 2017
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    Cited by:

    1. Tiwari, Atul Kumar & Ghei, Dhananjay & Goel, Prerna, 2017. "Social Security Agreements (SSAs) in practice: Evidence from India's SSAs wih countries in Europe," Working Papers 17/203, National Institute of Public Finance and Policy.
    2. Bhabesh Hazarika & Pratap Ranjan Jena, 2017. "Public Procurement in India: Assessment of Institutional Mechanism, Challenges, and Reforms," Working Papers id:12004, eSocialSciences.
    3. Atul Tiwari & Dhananjay Ghei & Prerna Goel, 2017. "Social Security Agreements (SSAs) in practice: Evidence from India’s SSA with countries in Europe," Working Papers id:12005, eSocialSciences.
    4. Rezaei Soufi, Hojat & Esfahanipour, Akbar & Akbarpour Shirazi, Mohsen, 2022. "A quantitative approach for analysis of macroeconomic resilience due to socio-economic shocks," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    5. Chhibber, Ajay & Gupta, Swati, 2017. "Bolder Disinvestment or Better Performance Contracts? Which Way Forward for India's State-Owned Enterprises," Working Papers 17/205, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Macroeconomic performance ; Eco-macroeconomic performance ; Data Envelopment Analysis ; Autoregressive Distributed Lag (ARDL) ; India.;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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