Non-linear Effect of Real Exchange Rate Variability with Macroeconomic Variable on Non-Petroleum Commodities of India– US Trade

Abstract

This article aims to explore the asymmetric influence of real exchange rate volatility on India–US trade commodity-wise. In this study, the assumption of symmetric relation is neglected and assessed on the asymmetric effect of real exchange rate volatility on 90 commodities distributed under 6 industries. This study verifies short-run and long-run asymmetry effects, the short-run effect in 21 Indian exporting commodities and 19 Indian importing commodities. However, the short-run effect lasting onto the long run in 16 exporting commodities and 27 importing commodities strongly supports the J-curve. Also, non-linear causality is witnessed in this study running from real exchange rate variability to export trade and import trade. The empirical analyses explain that commodities will benefit the export or import growth with the depreciation of exchange rate or discouraging with the appreciation of exchange rate. The findings of the study provide a view for policy making. JEL Codes: C22, F1, F14, F31, O19

Trump and Modi and the ideological, political and economic underpinnings of the India–United States trade dispute

“…The dairy industry especially the US Dairy Export Council and National Milk Producers Federation lobbied the Trump administration to pressurise India to reduce import duties on agricultural products and provide greater access in this sector (Gunjan, 2019). Reduction on import duties on US agricultural products and providing the US with increased market access is very tricky and problematic for any Indian government.…”

“…US cattle feed contains blood meal, internal organs and tissues of ruminant which is against the religious sentiment of majority of the Indians. India has had a consistent policy in this regard since 2003 when BJP's Atal Bihari Vajpayee was the PM (Gunjan, 2019). There are also concerns that such animals can get infected by mad cow disease which can affect human beings and prove fatal.…”

“…The Modi government would never allow US dairy products without certification’ (Pandey and Arnimesh, 2020). An official from the MoCI, GoI, stated, ‘…the issue of US wanting India to import dairy products sourced from animals fed with blood meal cannot be flexed’ (Gunjan, 2019). The EU, New Zealand and Australia have complied with this requirement, but the US resisted the mandatory certification (Suneja, 2018).…”