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India’s Increased International Integration and the Financial Crisis: Has India Become More Prone to External Shocks?

Author

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  • Sircar, Jyotirmoy

Abstract

This paper looks at the impact of the global financial crisis on the Indian Economy via the three potential channels of contagion namely the trade channel, the financial channel and the confidence channel. We do so by analyzing the quarterly data of India’s Balance of Payments (BOP) for the time period 2007-2008 to 2009-2010. We come to the conclusion that India has become more prone to external shocks which is but natural with increased integration with the world economy and particularly financial integration. However the economy was already experiencing a downturn two quarters before the onset of the effects of the crisis on the Indian Economy and hence, at best, we can say that due to the crisis the downturn got accentuated for a few more quarters. The economy also seems to have recovered within a short period of time.

Suggested Citation

  • Sircar, Jyotirmoy, 2010. "India’s Increased International Integration and the Financial Crisis: Has India Become More Prone to External Shocks?," MPRA Paper 25560, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:25560
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    References listed on IDEAS

    as
    1. Frederic S. Mishkin, 2007. "Is Financial Globalization Beneficial?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(2-3), pages 259-294, March.
    2. Duvvuri Subbarao, 2009. "Impact of the Global Financial Crisis on India Collateral Damage and Response," Working Papers id:1870, eSocialSciences.
    3. S. Narayan, 2009. "India," Chapters, in: Peter Draper & Philip Alves & Razeen Sally (ed.), The Political Economy of Trade Reform in Emerging Markets, chapter 7, Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Integration; Crisis; BOP; Fiscal stimulus;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises

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