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Growth Volatility and Financial Repression: Time Series Evidence from India

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Author Info
Ang, James

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Abstract

The main objective of this paper is to explore the determinants of private consumption volatility in India. While considerable effort has been expended on the examining the relationship between growth and volatility, we focus on financial repression and private consumption volatility in India. Using annual time series data, the results show that the implementation of financial repressionist policies are strongly associated with lower consumption volatility in India. The results remain robust after controlling for a wide range of macroeconomic shocks and variables. Additional analysis which involves examining each component of private consumption provides further evidence to support this finding. The presence of a threshold effect suggests that the benefits of financial openness in dampening consumption volatility can only be reaped when India becomes sufficiently liberalized.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14412.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:14412

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Related research
Keywords: Growth volatility; financial repression; India.;

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Find related papers by JEL classification:
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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