Assessing the Role of Trade in Transmission of Global Financial Crisis to the Indian Economy
Over the past few decades, while trade has contributed significantly to economic growth in various economies including India, openness has also exposed them to vagaries of external shocks. While recent global financial crisis (GFC) essentially originated in advanced economies, it got transmitted to emerging market economies through three main channels viz., financial, trade, and confidence channel. Relatively, while financial channel had a more dominant role in transmitting global shocks to Indian economy, its growing trade openness had led to decline in both exports and imports from the latter half of 2008 till 2009. Against this backdrop, this study primarily focuses on studying the impact of trade shock emanating from GFC on the Indian economy. In empirical analysis, it is found that the impact of recent trade shock on the economy remained minimal and short-lived. Under S-VAR framework (quarterly data from 1996-97 to 2009-10), impulse response analysis suggests that the impact of export demand on India’s gross domestic product (GDP) persists for a short while, which is validated by recent strong rebound of the economy in the aftermath of global financial crisis. This is in line with our expectations as GDP growth in India is primarily driven by domestic consumption, while external demand plays a minimal role.
|Date of creation:||Aug 2011|
|Date of revision:||Dec 2011|
|Publication status:||Published in Indian Journal of Economics & Business 4.10(2011): pp. 533-552|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Korhonen, Iikka & Fidrmuc , Jarko, 2009.
"The impact of the global financial crisis on business cycles in Asian emerging economies,"
BOFIT Discussion Papers
11/2009, Bank of Finland, Institute for Economies in Transition.
- Fidrmuc, Jarko & Korhonen, Iikka, 2010. "The impact of the global financial crisis on business cycles in Asian emerging economies," Journal of Asian Economics, Elsevier, vol. 21(3), pages 293-303, June.
- Jarko Fidrmuc & Iikka Korhonen, 2009. "The Impact of the Global Financial Crisis on Business Cycles in Asian Emerging Economies," CESifo Working Paper Series 2710, CESifo Group Munich.
- International Monetary Fund, 1999. "Sources of Contagion; Finance or Trade?," IMF Working Papers 99/146, International Monetary Fund.
- Michael Artis & Toshihiro Okubo, 2011.
"Does International Trade Really Lead To Business Cycle Synchronization?—A Panel Data Approach,"
University of Manchester, vol. 79(2), pages 318-332, 03.
- Michael Artis & Toshihiro Okubo, 2011. "Does International Trade Really Lead to Business Cycle Synchronization?-A panel data approach," Discussion Paper Series DP2011-05, Research Institute for Economics & Business Administration, Kobe University.
- Charles Engel & Kristin Forbes & Jeffrey Frankel, 2012. "Global Financial Crisis," NBER Books, National Bureau of Economic Research, Inc, number enge11-2, 07.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40208. See general 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.