Has India emerged? Business cycle stylized facts from a transitioning economy

Abstract

This paper presents a comprehensive set of stylized facts for business cycles in India from 1950 to 2010. We show that most macroeconomic variables are less volatile in the post reform period, even though the volatility of macroeconomic variables is still high and similar to other emerging market economies. Consistent with other emerging market economies, relative consumption volatility has gone up in the post reform period. In terms of co-movement and persistence however, India looks similar to advanced economies, and less like other emerging market economies. We report evidence that these changes are driven primarily by structural changes caused by market oriented reforms, and not by “good luck.”