Pranjul Bhandari

Pranjul Bhandari

Singapore
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About

Research interests: Macro-economics, financial regulation and public policy

Activity

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Experience

  • HSBC Graphic

    HSBC

    Singapore

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    Mumbai, Maharashtra, India

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    Washington D.C. Metro Area

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    Cambridge, Massachusetts, United States

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    Delhi, India

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    Hong Kong

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    London, United Kingdom

Education

Publications

  • The Best of Rules and Discretion: A Case for Nominal GDP Targeting in India

    Center for International Development (CID) at Harvard University, Working Paper No. 284

    The recent revival of interest in nominal GDP (NGDP) targeting has come in the context of large advanced economies. We argue that the case for NGDP targeting is even more appealing for mid-sized developing countries, because they tend to be more susceptible to supply shocks and terms of trade shocks. NGDP targeting splits the impact of supply shocks automatically between inflation and real GDP growth. In the case of inflation targeting (IT), by contrast, the full impact of an adverse supply…

    The recent revival of interest in nominal GDP (NGDP) targeting has come in the context of large advanced economies. We argue that the case for NGDP targeting is even more appealing for mid-sized developing countries, because they tend to be more susceptible to supply shocks and terms of trade shocks. NGDP targeting splits the impact of supply shocks automatically between inflation and real GDP growth. In the case of inflation targeting (IT), by contrast, the full impact of an adverse supply shock or terms of trade shock is felt as a loss in real GDP alone. NGDP targeting arguably achieves the best of both worlds: it automatically accommodates supply shocks as most central banks with discretion would do anyway, while retaining the advantage of anchoring expectations as rules are designed to do. We outline a simple theoretical model and derive the conditions under which an NGDP targeting regime would dominate other regimes such as IT for achieving objectives of output and price stability. We go on to estimate for the case of India the main parameters needed to ascertain whether these conditions hold, most notably the slope of the aggregate supply curve. We find that under certain plausible conditions, nominal GDP targeting is indeed better placed than IT, especially in the face of the supply shocks that developing countries tend to experience. For India, in particular, a major exogenous supply shock is the monsoon rains.

    Other authors
    • Jeffrey Frankel
    See publication

  • The Coal Saga: The Imminent and the Feasible

    Economic and Political Weekly

    It is no longer possible to have a coal sector that is not updated to the needs of the times. Can we make changes that through rules, and given the constraints, minimise the discretion of personalities and carry us towards a more respectable outcome? Here are some proposals.

    Other authors
    • Rohit Lamba
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  • Decoding the Growth Target

    Economic and Political Weekly

    The Planning Commission has announced an average gross domestic product growth target of 8% for the Twelfth Five-Year Plan period. This article disaggregates the 8% growth target into what could be achieved through a business-asusual approach and what would need an added effort. It outlines a simple Cobb-Douglas production function model that decodes India's growth over the last two decades and helps outline alternate paths to the 8% target. The article also discusses a variety of "extreme"…

    The Planning Commission has announced an average gross domestic product growth target of 8% for the Twelfth Five-Year Plan period. This article disaggregates the 8% growth target into what could be achieved through a business-asusual approach and what would need an added effort. It outlines a simple Cobb-Douglas production function model that decodes India's growth over the last two decades and helps outline alternate paths to the 8% target. The article also discusses a variety of "extreme" paths of growth which depend heavily on one particular input at a time. It then goes on to outline a more plausible and balanced path, and discusses the key challenges surrounding it.

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