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Technology as a channel of economic growth in India

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  • Suparna Chakraborty

    (Baruch College, CUNY)

Abstract

After decades of slow growth since Independence from the British Raj, Indian economy registered its own small miracle, when growth rate of GDP per capita surpassed the long term growth rate of many advanced economies. What caused this miracle? In this paper, we search for an answer in the neoclassical growth model. We use productivity as measured by Solow residual as our exogenous shock. Our idea is to quantitatively measure to what extent ‡fluctuations in productivity can account for observed ‡uctuations in macro economic aggregates in India. We find that exogenous fl‡uctuations in productivity can well account for fl‡uctuations in output during the boom periods of 1982 to 1988 and 1993 to 2002. However, fluctuations in productivity alone results in a much worse drop in ouput during 1988 to 1993 than observed in the economy.

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File URL: http://128.118.178.162/eps/mac/papers/0512/0512013.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0512013.

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Length: 24 pages
Date of creation: 19 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpma:0512013

Note: Type of Document - pdf; pages: 24
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Web page: http://128.118.178.162

Related research

Keywords: technology; growth accounting; neoclassical growth; calibration; transition dynamics; India;

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  1. Jordi Gali, 1999. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," American Economic Review, American Economic Association, vol. 89(1), pages 249-271, March.
  2. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Staff Report 102, Federal Reserve Bank of Minneapolis.
  3. Gali, Jordi, 1992. "How Well Does the IS-LM Model Fit Postwar U.S. Data," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 709-38, May.
  4. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-24.
  5. Jordi Galí & Pau Rabanal, 2004. "Technology Shocks and Aggregate Fluctuations," IMF Working Papers 04/234, International Monetary Fund.
  6. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2003. "Accounting for the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-8.
  7. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
  8. Pedro Amaral & James Macgee, 2002. "Data Appendix to The Great Depression in Canada and the United States: A Neoclassical Perspective," Technical Appendices amaral02, Review of Economic Dynamics.
  9. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Accounting for the Great Depression (technical appendix)," Working Papers 619, Federal Reserve Bank of Minneapolis.
  10. Jonas Fisher, 2004. "Technology Shocks Matter," Econometric Society 2004 North American Winter Meetings 14, Econometric Society.
  11. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
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