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Effect of Rainfall on Seasonals in Indian Manufacturing Production: Evidence from Sectoral Data

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  • Kumawat, Lokendra

Abstract

Recent research has shown that the seasonals in Indian manufacturing production are affected by rainfall. Since the effect of rainfall comes through agricultural production, this finding raises the question of whether the effect is through demand channel or supply channel. This paper attempts to provide a preliminary answer to this question by testing for this effect in the production in different sub-sectors within the manufacturing sector. We look at the three subsectors which have more than 10% weightage each in the index of manufacturing production: (i) food products, (ii) basic chemicals and chemical products (except products of petroleum and coal), and (iii) machinery and equipment (other than transport equipment). As almost all the estimated models show some type of misspecification, we also estimate models that allow for time-variation in this behaviour. We find evidence for effect of rainfall on overall dynamics of all three components studied, and also for significant time variation in this behaviour. Focusing on seasonal component, while estimations were not possible for the basic chemicals and chemical products, for the other two components we find evidence of significant effect of rainfall on seaosonality, indicating both the channels are significant.

Suggested Citation

  • Kumawat, Lokendra, 2010. "Effect of Rainfall on Seasonals in Indian Manufacturing Production: Evidence from Sectoral Data," MPRA Paper 25300, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:25300
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    References listed on IDEAS

    as
    1. Lokendra Kumawat, 2010. "Modelling changes in seasonality in Indian manufacturing production: an application of the STAR model," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(4), pages 361-372.
    2. Pami Dua & Lokendra Kumawat, 2005. "Modelling and Forecasting Seasonality in Indian Macroeconomic Time Series," Working papers 136, Centre for Development Economics, Delhi School of Economics.
    3. Terasvirta, T & Anderson, H M, 1992. "Characterizing Nonlinearities in Business Cycles Using Smooth Transition Autoregressive Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(S), pages 119-136, Suppl. De.
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    5. Dick van Dijk 1 & Birgit Strikholm & Timo Teräsvirta, 2003. "The effects of institutional and technological change and business cycle fluctuations on seasonal patterns in quarterly industrial production series," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 79-98, June.
    6. Asep Suryahadi & Daniel Suryadarma & Sudarno Sumarto & Jack Molyneaux, "undated". "Agricultural Demand Linkages and Growth Multiplier in Rural Indonesia," Working Papers 355, Publications Department.
    7. Franses, Ph.H.B.F. & de Bruin, P. & van Dijk, D.J.C., 2000. "Seasonal smooth transition autoregression," Econometric Institute Research Papers EI 2000-06/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    8. Kanwar, Sunil, 2000. "Does the Dog Wag the Tail or the Tail the Dog? Cointegration of Indian Agriculture with Nonagriculture," Journal of Policy Modeling, Elsevier, vol. 22(5), pages 533-556, September.
    9. Lokendra Kumawat, 2010. "Modelling changes in seasonality in Indian manufacturing production: an application of the STAR model," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(4), pages 361-372.
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    More about this item

    Keywords

    Seasonality; Manufacturing Production; Smooth Transition Autoregression;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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