Capital Flows, Financial Asset Prices and Real Financial Market Exchange - Rate: A Case Study for an Emerging Market, India
AbstractIn this paper we empirically investigate the relationship between capital flows and exchange rates in India based on a new index of real effective exchange rates for the Indian Rupiah. Instead of using consumer price indices we deflate exchange rates by MSCI asset price indices. The cointegration analysis indicates a long-run equilibrium relationship between our real financial market exchange rate and the net outstanding equity investment in India. In the short run capital inflows are accompanied by an appreciation of real financial exchange rate of the Rupiah
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Advanced Studies Working Papers with number 461.
Length: 25 pages
Date of creation: Jul 2012
Date of revision:
Real Exchange Rate; Capital Flows; Financial Asset Prices; Emerging Financial Markets; India.;
Other versions of this item:
- Saurabh Ghosh & Stefan Reitz, 2013. "Capital Flows, Financial Asset Prices and Real Financial Market Exchange Rate: A Case Study for an Emerging Market, India," Journal of Reviews on Global Economics, Lifescience Global, vol. 2, pages 158-171.
- F31 - International Economics - - International Finance - - - Foreign Exchange
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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