Price and Income Elasticity of Indian Exports—The Role of Supply-Side Bottlenecks

Author/Editor:

Mehdi Raissi ; Volodymyr Tulin

Publication Date:

July 17, 2015

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper estimates the short-term and long-run price and income elasticity of Indian exports, and investigates the role of supply-side bottlenecks in shaping India’s export demand relationship. We use disaggregated export volume data for 45 Indian industries over the period 1990-2013, as well as industry-specific international relative prices, for estimation. Our results indicate that Indian exports are sensitive to international relative-price competitiveness, world demand, and energy shortages. In addition, binding supply-side constraints (notably energy shortages) dampen price responsiveness in the short-term.

Series:

Working Paper No. 15/161

Subject:

English

Publication Date:

July 17, 2015

ISBN/ISSN:

9781513544816/1018-5941

Stock No:

WPIEA2015161

Format:

Paper

Pages:

16

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