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An Exchange Market Pressure Model for India


  • Priya Mathur

    (World Bank)


This study has two objectives: first, it tries to explain both exchange rate movements and official intervention through the use of a single dependent variable, Exchange Market Pressure (EMP); second, it provides a measure of the degree of monetary autonomy that a country possesses. These objectives are evaluated within the framework of a bilateral model comprising India and Rest of the World, over the period covering January 1980 to July 1998. The study uses the Girton and Roper (1977) monetary model of EMP which is modified to incorporate explicitly the role played by expectations in generating EMP. The conclusion reached is that the modified model performs much better than the original Girton and Roper(G-R) model in explaining EMP, and that the results could probably be further improved by using a model that embodies the general equilibrium approach as opposed to the partial equilibrium approach of the G-R model and the modified version used in this study.

Suggested Citation

  • Priya Mathur, 1999. "An Exchange Market Pressure Model for India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 34(2), pages 127-148, July.
  • Handle: RePEc:dse:indecr:v:34:y:1999:i:2:p:127-148

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    References listed on IDEAS

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    Cited by:

    1. Sayera Younus, 2010. "Exchange Market Pressure and Monetary Policy," Working Papers id:2389, eSocialSciences.
    2. Panday, Anjan, 2015. "Impact of monetary policy on exchange market pressure: The case of Nepal," Journal of Asian Economics, Elsevier, vol. 37(C), pages 59-71.
    3. Stavarek, Daniel & Dohnal, Marek, 2009. "Exchange Market Pressure in Central Europe: An Application of the Girton-Roper Model," MPRA Paper 15744, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange


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