Economics, Econometrics and Finance
7 years ago

IST shocks drive Indian economy, TFP loses importance post-liberalization era.

Macroeconomic Dynamics
TECHNOLOGY SHOCKS AND BUSINESS CYCLES IN INDIA
Shesadri Banerjee, Parantap Basu

Paper Summary

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The study looked at how technology shocks affect the economy in India. They found that total factor productivity (TFP) shock has a positive impact on output, while investment specific technology (IST) shock has a negative impact. TFP and IST shocks are the main drivers of economic fluctuations in India, with demand side shocks playing a smaller role. Over time, IST shocks have become more important in India's economy, especially after the liberalization period.