Business cycle synchronization: Disentangling direct and indirect effect of financial integration in the Indian context

Padhan, Rakesh and Prabheesh, K P (2020) Business cycle synchronization: Disentangling direct and indirect effect of financial integration in the Indian context. Economic Modelling, 85. pp. 1-16. ISSN 0264-9993 (In Press)

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Abstract

The study empirically investigates the effect of financial integration (FI) on business cycle synchronization (BCS) in the Indian context. Using concordance index, dynamic conditional correlation, and 3SLS, we find: (1) India's business cycle is significantly synchronized with nine economies (2) The evaluation of BCS shows a higher synchronization with the five economies (3) FI, directly and indirectly, reduces BCS (4) The direct effect of FI occurs through wealth effect, in most cases, indicating dominance of portfolio diversification against portfolio rebalancing associated with balance sheet effect (5) FI reduces the BCS, indirectly through intra-industry trade and differences in economic specialization. © 2019 Elsevier B.V.

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IITH Creators:
IITH CreatorsORCiD
Prabheesh, K Phttps://orcid.org/0000-0001-6323-8217
Item Type: Article
Uncontrolled Keywords: Indexed in Scopus
Subjects: Arts > Liberal arts
Divisions: Department of Liberal Arts
Depositing User: Team Library
Date Deposited: 13 Nov 2019 06:36
Last Modified: 26 Oct 2022 15:05
URI: http://raiithold.iith.ac.in/id/eprint/6981
Publisher URL: http://doi.org/10.1016/j.econmod.2019.10.010
OA policy: https://v2.sherpa.ac.uk/id/publication/15555
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