Based on the characteristics of the inflation data for India, the paper first identifies the poss... more Based on the characteristics of the inflation data for India, the paper first identifies the possible number of significantly different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of very high levels of inflation but is also associated with the low levels.
This paper presents an empirical model for minimising selection failure by tax departments in sel... more This paper presents an empirical model for minimising selection failure by tax departments in selecting cases for scrutiny assessment. This model also provides a new methodology for estimating tax gap from limited information that the department collects on a regular basis through scrutiny assessments. Using a maximum-likelihood procedure that corrects for sample selection bias, and the data on the scrutiny assessment exercise carried out by the income tax department, we estimate the model which relates the probability and extent of under-reporting to various inputs provided by the tax filer. The estimated model provides a mechanism to analyse the trade-off between two types of cases of failure - wrong selection of a case and failure to take up the potential underreporter.
The paper explores the reasons for low TRax - GDP ratio in India and makes policy recomendations ... more The paper explores the reasons for low TRax - GDP ratio in India and makes policy recomendations to enhance the ratio to realise the vision of development.
The paper estimates the extent of under-taxation using cross country regressions and analyses the... more The paper estimates the extent of under-taxation using cross country regressions and analyses the reasons for under-taxation. It also estimates the tax-GDP ratio that needs to be raised for realising the vision of accelerating growth to 8 per cent on a sustained basis in the next 15 years.
Purpose – In the past two decades, there has been a remarkable decline in inflation in both devel... more Purpose – In the past two decades, there has been a remarkable decline in inflation in both developed and developing countries, in sharp contrast to the period immediately preceding it. Interestingly, the behaviour of inflation in India broadly exhibits such a pattern. For much of the 1970s and 1980s, India experienced recurrent bouts of high inflation together with sub-par economic performance. Since the 1990s the inflation record has been far better. The purpose of this paper is to answer an important question about what ultimately brought on this improved economic outcome. Design/methodology/approach – A time-varying parameter model for inflation is proposed which nests all the plausible explanations. The time variation in parameters is modelled as driftless random walks, and is estimated using the median unbiased estimator. The median unbiased estimate helps in addressing the pile-up problem, which arise if variances of the state specification are small. In such cases the maximu...
Based on the characteristics of the inflation data for India, the paper first identifies the poss... more Based on the characteristics of the inflation data for India, the paper first identifies the possible number of significantly different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of very high levels of inflation but is also associated with the low levels.
Empirical estimates of the Reserve Bank of India's (RBI) intervention reaction function suggest t... more Empirical estimates of the Reserve Bank of India's (RBI) intervention reaction function suggest that the central bank actively intervenes in the foreign exchange market to contain volatility but this intervention is neither continuous nor linear. It is better described by a nonlinear policy reaction function with a target range as opposed to a point target. It responds much more vigorously to appreciating or depreciating pressure outside the target range but the response is much more muted within the range. Moreover, the tolerance band is asymmetric i.e., the RBI responds much more strongly to appreciating pressure than depreciating pressure. Such a policy response in an era of continuous net capital inflows accounts for the large build-up in foreign exchange reserves witnessed in India in the recent past.► Reserve Bank of India (RBI) actively intervenes in the foreign exchange market. ► Intervention is better described by a nonlinear policy reaction function with a target range. ► The tolerance band of RBI for the movement in the exchange rate is asymmetric. ► Response to changes in exchange rate is stronger outside the target range than within range. ► Such a policy response accounts for the large build-up in foreign exchange reserves in India.
Based on the characteristics of the inflation data for India, the paper first identifies the poss... more Based on the characteristics of the inflation data for India, the paper first identifies the possible number of significantly different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of very high levels of inflation but is also associated with the low levels.
This paper presents an empirical model for minimising selection failure by tax departments in sel... more This paper presents an empirical model for minimising selection failure by tax departments in selecting cases for scrutiny assessment. This model also provides a new methodology for estimating tax gap from limited information that the department collects on a regular basis through scrutiny assessments. Using a maximum-likelihood procedure that corrects for sample selection bias, and the data on the scrutiny assessment exercise carried out by the income tax department, we estimate the model which relates the probability and extent of under-reporting to various inputs provided by the tax filer. The estimated model provides a mechanism to analyse the trade-off between two types of cases of failure - wrong selection of a case and failure to take up the potential underreporter.
The paper explores the reasons for low TRax - GDP ratio in India and makes policy recomendations ... more The paper explores the reasons for low TRax - GDP ratio in India and makes policy recomendations to enhance the ratio to realise the vision of development.
The paper estimates the extent of under-taxation using cross country regressions and analyses the... more The paper estimates the extent of under-taxation using cross country regressions and analyses the reasons for under-taxation. It also estimates the tax-GDP ratio that needs to be raised for realising the vision of accelerating growth to 8 per cent on a sustained basis in the next 15 years.
Purpose – In the past two decades, there has been a remarkable decline in inflation in both devel... more Purpose – In the past two decades, there has been a remarkable decline in inflation in both developed and developing countries, in sharp contrast to the period immediately preceding it. Interestingly, the behaviour of inflation in India broadly exhibits such a pattern. For much of the 1970s and 1980s, India experienced recurrent bouts of high inflation together with sub-par economic performance. Since the 1990s the inflation record has been far better. The purpose of this paper is to answer an important question about what ultimately brought on this improved economic outcome. Design/methodology/approach – A time-varying parameter model for inflation is proposed which nests all the plausible explanations. The time variation in parameters is modelled as driftless random walks, and is estimated using the median unbiased estimator. The median unbiased estimate helps in addressing the pile-up problem, which arise if variances of the state specification are small. In such cases the maximu...
Based on the characteristics of the inflation data for India, the paper first identifies the poss... more Based on the characteristics of the inflation data for India, the paper first identifies the possible number of significantly different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of very high levels of inflation but is also associated with the low levels.
Empirical estimates of the Reserve Bank of India's (RBI) intervention reaction function suggest t... more Empirical estimates of the Reserve Bank of India's (RBI) intervention reaction function suggest that the central bank actively intervenes in the foreign exchange market to contain volatility but this intervention is neither continuous nor linear. It is better described by a nonlinear policy reaction function with a target range as opposed to a point target. It responds much more vigorously to appreciating or depreciating pressure outside the target range but the response is much more muted within the range. Moreover, the tolerance band is asymmetric i.e., the RBI responds much more strongly to appreciating pressure than depreciating pressure. Such a policy response in an era of continuous net capital inflows accounts for the large build-up in foreign exchange reserves witnessed in India in the recent past.► Reserve Bank of India (RBI) actively intervenes in the foreign exchange market. ► Intervention is better described by a nonlinear policy reaction function with a target range. ► The tolerance band of RBI for the movement in the exchange rate is asymmetric. ► Response to changes in exchange rate is stronger outside the target range than within range. ► Such a policy response accounts for the large build-up in foreign exchange reserves in India.
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Papers by sudhanshu kumar
different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum
Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of
very high levels of inflation but is also associated with the low levels.
Talks by sudhanshu kumar
different regimes using Kernel density estimates; and then it estimates a Markov-switching model using the Maximum
Likelihood Estimation. Estimated results suggest that high inflation uncertainty in India has not only been a feature of
very high levels of inflation but is also associated with the low levels.