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Does Full Sterilization Feasible in Era of Excess Volatility: Evidence from India

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  • Chandan Sharma

    (Economics and Business Policy, FORE School of Mangement)

Abstract

India has accumulated a huge pile of international reserves, which is certainly more than the country's precautionary requirements. In this study, I test the extent and impact of the sterilization in India by using Toda and Yamamoto version of Granger Causality and Impulse Response function. The results of the analysis reveal that in India, the central bank (RBI) has been pursuing the sterilization policy, however, not able to fully insulate the domestic market from the external shocks.

Suggested Citation

  • Chandan Sharma, 2009. "Does Full Sterilization Feasible in Era of Excess Volatility: Evidence from India," Economics Bulletin, AccessEcon, vol. 29(4), pages 2944-2950.
    • Handle: RePEc:ebl:ecbull:eb-09-00553
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    References listed on IDEAS

    as
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    5. Joshua Aizenman & Jaewoo Lee, 2007. "International Reserves: Precautionary Versus Mercantilist Views, Theory and Evidence," Open Economies Review, Springer, vol. 18(2), pages 191-214, April.
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    More about this item

    Keywords

    Sterilization; Money Supply; India.;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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