Did the Indian capital controls work as a tool of macroeconomic policy?
AbstractIn 2010 and 2011, there has been a fresh wave of interest in cap- ital controls. India is one of the few large countries with a complex system of capital controls, and hence offers an opportunity to assess the extent to which these help achieve goals of macroeconomic and fi- nancial policy. We find that the capital controls were associated with poor governance, were unable to sustain the erstwhile exchange rate regime, and did not support financial stability. India's experience is thus inconsistent with the revisionist view of capital controls. Macroe- conomic policy in India has moved away from the erstwhile strategies, towards greater exchange rate flexibility combined with capital ac- count liberalisation.
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Date of creation: Apr 2011
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Note: Working Paper 87, 2011
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Capital controls ; Exchange rate regime ; Monetary policy ; Impossible trinity ; Financial stability;
Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-21 (All new papers)
- NEP-CBA-2011-07-21 (Central Banking)
- NEP-IFN-2011-07-21 (International Finance)
- NEP-MON-2011-07-21 (Monetary Economics)
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