Review of Professional Management- A Journal of New Delhi Institute of Management

Shubhangi Jore ¹, R. C. Sharma ²

Affiliations
1 Prestige Institute of Management and Research, Devi Ahilya University, Indore, IN
2 Central University of Rajasthan, Kishangarh (Ajmer) 305801, Rajasthan, IN

Abstract

The concept of asymptotic level of consumption is defined as increase in consumption of a commodity with income but only up to a level and then after reaching a maximum level it becomes stable irrespective of income. Especially, food consumption stops increasing with an increase in income because of the limitation associated with digestive system. It is observed that empirical study on maximum food consumption as well as threshold income have not been done on Indian situation. Growing need was felt to conduct an academic study for Indore city with respect to their food consumption pattern to derive the maximum potential level of consumption termed as asymptotic limit of consumption as well as threshold level of income. Data from Indore city are collected on the basis of a sample of size of 714 household units. Then, the asymptotic limit of consumption and threshold level of income have been estimated using reciprocal transformation method. In all the cases, there exists significant positive relationship between income and food consumption. Hence, the first hypothesis, β₁ > 0, was accepted at 5% level of significance for food commodities rice, wheat, other cereals, pulses, dairy products, edible oil, eggs and other food items. This indicates that increase in income results in increase in food consumption derived from the above mentioned food categories. Consumption of these food categories seems to have reasonable prospect for expansion although at a lower rate, especially in the case of animal products. The analysis suggests that consumption is still well below saturation level(asymptotic level) and that appreciable increases are still possible.

Keywords

Asymptotic Limit, Threshold Level, Indore city, Food Consumption.

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Rupal Chowdhary ¹, Shubhangi Jore ¹, Vibha Sahu ¹, Raksha Thakur ¹

Affiliations
1 Prestige Institute of Management and Research, Devi Ahilya University, Indore, IN

Abstract

At present, most Developing Countries have been facing persistent trade deficits in the regime of exchange rate liberalization that most of countries are practicing. The value of domestic currency in terms of foreign currency in the liberalized foreign exchange market is determined through market forces. International Economics is based on the assumption that a real devaluation of a nation's currency against foreign currency improves the trade balance and its current account. A decline in a nation's currency value in terms of foreign currency is likely to make export commodities relatively cheaper in the world market thus, increasing the volume of exports. Imports of the currency depreciating country turns costlier and hence, the volume of imports should reduce in response to devaluation. However, the Marshall Lerner condition states that devaluation of currency improves the balance of trade only if the sum of the price elasticities of demand for exports and for imports is greater than one. The objective of the study is to identify the relationship between Trade Balance and the exchange rate. Here, Trade Balance is defined as the ratio of exports to imports. In order to test results, the Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) stationary tests are used to check for the presence of a unit ischolar_main for the individual variable and first differences among variables. The results indicated that Marshall Lerner condition is applicable in Indian context for the period of 1996 to 2011.

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