Real Exchange Rates and International Competitiveness of SAAR Countries: An Analysis of Bangladesh, India, Pakistan and Sri-Lanka for 1960-2000

In an attempt to measure the intra and international trade competitiveness, we construct the indices of real exchange rate (RER), the conventional measure of competitiveness, for four major South Asian Association of Regional Cooperation (SAARC) nations using annual data for the period of 1960-2000. The objective of the study is to examine the performances of the sampled countries especially after the economic reforms through trade liberalisation that have been taken place under South Asian Preferential Trading Arrangement (SAPTA) and comparing the evolution in Bangladesh, India, Pakistan and Sri Lanka. Our empirical results reveal that in terms of intra regional trade the smaller countries, namely Bangladesh and Sri Lanka reap the higher gains from openness in their trade regime. However, Bangladesh and India gained international competitiveness not until mid 1990s. Movements of Real exchange rates for Pakistan and Sri Lanka indicate that trade liberalisation efforts did not seem to have much positive gain in terms of international trade.SAARC, SAPTA, SAFTA, Trading Bloc, Intra- and international Competitiveness, Real exchange rate, Openness in trade regime

India’s Outward Foreign Direct Investment: Closed Doors to Open Souk

Abstract: Spectacular liberalisation of trade and investment policies opened the floodgate of capital flows in and out of India from the mid 1990s. This colossal capital flows facilitated the rapid economic growth and raised the country’s profile as one of the super powers in the region. The recent surge of outward foreign direct investment (OFDI) from India has a significant balance of payments as well as enormous socio economic effect in securing the country’s position as a new economic power in the global context. Since the study on the OFDI is sparse, this paper attempts to contribute to the literature by examining the major determinants of OFDI from India using the cointegration and Vector Error Correction Model over 1970 and 2009. The results of our study indicate that the dramatic financial and trade liberalisation has instigated the gigantic outflow of investment and acquisition by India’s firms. Furthermore, the domestic economic environment including the growing human capital stocks, increasing international competitiveness, large influx of inflow of foreign capital and increased domestic savings are positively and significantly influencing India’s huge outward capital flows in recent decade. However, improvement in domestic technological capabilities, rising standard of living and increased interest rates are deterrents to the OFDI of the country in the long run. Granger causality test also indicates that while all the above mentioned independent variables are Granger causing OFDI, nevertheless, outward FDI does not Granger cause any of the factors determining the OFDI from India.Keywords: Inward FDI, Outward FDI, Economic Growth, India, Cointegration, VECM, Endogeniety test, Granger Causality Test

Sequential Procedure for Testing Unit Roots in the Presence of Structural Break in Time Series Data

Testing for unit roots has special significance in terms of both economic theory and the interpretation of estimation results. As there are several methods available, researchers face method selection problem while conducting the unit root test on time series data in the presence of structural break. This paper proposes a sequential search procedure to determine the best test method for each time series. Different test methods or models may be appropriate for different time series. Therefore, instead of sticking to one particular test method for all the time series under consideration, selection of a set of mixed methods is recommended for obtaining better results.Time Series, Stationarity, Unit Root Test, Structural Break, Sequential Procedure

BCS Instability and Finite Temperature Corrections to Tachyon Mass in Intersecting D1-Branes

A holographic description of BCS superconductivity is given in arxiv:1104.2843. This model was constructed by insertion of a pair of D8-branes on a D4-background. The spectrum of intersecting D8-branes has tachyonic modes indicating an instability which is identified with the BCS instability in superconductors. Our aim is to study the stability of the intersecting branes under finite temperature effects. Many of the technical aspects of this problem are captured by a simpler problem of two intersecting D1-branes on flat background. In the simplified set-up we compute the one-loop finite temperature corrections to the tree-level tachyon mass using the frame-work of SU(2) Yang-Mills theory in (1 + 1)-dimensions. We show that the one-loop two-point functions are ultraviolet finite due to cancellation of ultraviolet divergence between the amplitudes containing bosons and fermions in the loop. The amplitudes are found to be infrared divergent due to the presence of massless fields in the loops. We compute the finite temperature mass correction to all the massless fields and use these temperature dependent masses to compute the tachyonic mass correction. We show numerically the existence of a transition temperature at which the effective mass of the tree-level tachyons becomes zero, thereby stabilizing the brane configuration.Comment: Article, 95 pages, 59 figures, improved numerics, added reference