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What Caused the 1991 Currency Crisis in India?

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  • Valerie Cerra

    (International Monetary Fund)

  • Sweta Chaman Saxena

    (International Monetary Fund)

Abstract

Which model best explains the 1991 currency crisis in India? Did real overvaluation contribute to the crisis? This paper seeks the answers through error correction models and by constructing the equilibrium real exchange rate using a technique developed by Gonzalo and Granger (1995). The evidence indicates that overvaluation as well as current account deficits and investor confidence played significant roles in the sharp exchange rate depreciation. The ECM model is supported by superior out-of-sample forecast performance versus a random walk model. . Copyright 2002, International Monetary Fund

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal IMF Staff Papers.

Volume (Year): 49 (2002)
Issue (Month): 3 ()
Pages: 5

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Handle: RePEc:pal:imfstp:v:49:y:2002:i:3:p:5

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Cited by:
  1. Patricia, Tovar, 2011. "India: The use of temporary trade barriers," MPRA Paper 41054, University Library of Munich, Germany.
  2. Cheng, Fuzhi & Orden, David, 2006. "Exchange Rate Misalignment and Its Effects on Agricultural Producer Support Estimates (PSEs) in India," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia, International Association of Agricultural Economists 25299, International Association of Agricultural Economists.
  3. repec:ris:cieodp:2013_020 is not listed on IDEAS
  4. Cheng, Fuzhi & Orden, David, 2005. "Exchange rate misalignment and its effects on agricultural producer support estimates," MTID discussion papers, International Food Policy Research Institute (IFPRI) 81, International Food Policy Research Institute (IFPRI).
  5. Mahvash Saeed Qureshi, 2008. "Africa's Oil Abundance and External Competitiveness," IMF Working Papers, International Monetary Fund 08/172, International Monetary Fund.
  6. Bown, Chad P. & Tovar, Patricia, 2011. "Trade liberalization, antidumping, and safeguards: Evidence from India's tariff reform," Journal of Development Economics, Elsevier, Elsevier, vol. 96(1), pages 115-125, September.
  7. Lane, Philip R. & Schmukler, Sergio L., 2007. "The international financial integration of China and India," Policy Research Working Paper Series, The World Bank 4132, The World Bank.
  8. Cheng, Fuzhi & Orden, David, 2005. "Exchange Rate Misalignment and Its Effects on Agricultural Producer Support Estimates: Empirical Evidence from India and China," 2005 Annual meeting, July 24-27, Providence, RI, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19121, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization Evidenceon Poverty From India," IMF Working Papers, International Monetary Fund 10/218, International Monetary Fund.
  10. Vaz, Eric, 2013. "The Spatial Business Landscape of India," Journal of Spatial and Organizational Dynamics, CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve, CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve, vol. 1(4), pages 241-253.
  11. Sen Gupta, Abhijit, 2010. "Management of International Capital Flows: The Indian Experience," MPRA Paper 23747, University Library of Munich, Germany.
  12. Mallick, Sushanta K., 2005. "Tight credit policy versus currency depreciation: Simulations from a trade and inflation model of India," Journal of Policy Modeling, Elsevier, Elsevier, vol. 27(5), pages 611-627, July.

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