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A Divisia type saving aggregate for India

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  • Raghbendra Jha
  • Ibotombi Longjam

Abstract

Indian financial sector reforms initiated in 1991-92 have significantly affected user costs of assets and have resulted in significant substitution among them. Thus there is a need to develop a measure of savings that reflects household choice over assets more accurately than the simple sum. An advantage of monetary aggregates that are based on microtheoretic foundations, for example, the Divisia index, is that no a priori assumptions about asset substitutability need be imposed. We construct Divisia subaggregates of the financial assets component of Indian household savings and an overall aggregate of financial savings and demonstrate their superiority to the simple sum constructs.

Suggested Citation

  • Raghbendra Jha & Ibotombi Longjam, 2008. "A Divisia type saving aggregate for India," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(1), pages 51-66.
    • Handle: RePEc:taf:macfem:v:1:y:2008:i:1:p:51-66
    DOI: 10.1080/17520840701834966
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    Cited by:

    1. Eswar S. Prasad, 2011. "Rebalancing Growth in Asia," International Finance, Wiley Blackwell, vol. 14(1), pages 27-66, April.

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    More about this item

    Keywords

    Divisia aggregates; financial savings;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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