IDEAS home Printed from https://ideas.repec.org/a/oup/oxford/v23y2007i2p292-310.html
   My bibliography  Save this article

Capital inflows, financial repression, and macroeconomic policy in India since the reforms

Author

Listed:
  • Partha Sen

Abstract

Since the early 1990s the Indian economy has seen a considerable relaxation of controls, as a consequence of which it has witnessed unprecedented growth. This is especially remarkable in the external sector. In this paper I evaluate the progress made on the macroeconomic front and address the possibility of opening up the capital account of the balance of payments. I show that given the weakness in the financial sector and the government finances, it may be dangerous to speed up the process of opening up the capital account further.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Partha Sen, 2007. "Capital inflows, financial repression, and macroeconomic policy in India since the reforms," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(2), pages 292-310, Summer.
    • Handle: RePEc:oup:oxford:v:23:y:2007:i:2:p:292-310
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/oxrep/grm010
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ricardo J.Caballero, 2001. "Macroeconomic volatility in Latin America: a view and three case studies," Estudios de Economia, University of Chile, Department of Economics, vol. 28(1 Year 20), pages 5-52, June.
    2. Fernando Broner & Roberto Rigobon, 2004. "Why are capital flows so much more volatile in emerging than in developed countries?," Economics Working Papers 862, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Ricardo J. Caballero, 2000. "Macroeconomic Volatility in Latin America: A Conceptual Framework and Three Case Studies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 31-107, August.
    4. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, April.
    5. Kenneth M. Kletzer, 2004. "Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy, and Gradual Reforms," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 1(1), pages 227-275.
    6. Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
    7. Pami Dua & Partha Sen, 2006. "Capital Flow Volatility And Exchange Rates-- The Case Of India," Working papers 144, Centre for Development Economics, Delhi School of Economics.
    8. Buiter Willem H. & Urjit R. Patel, 2006. "Excessive Budget Deficits, a Government-Abused Financial System, and Fiscal Rules," India Policy Forum, National Council of Applied Economic Research, vol. 2(1), pages 1-54.
    9. Fernando A. Broner & Roberto Rigobon, 2006. "Why Are Capital Flows So Much Volatile in Merging Than in Developed Countries?," Central Banking, Analysis, and Economic Policies Book Series, in: Ricardo Caballero & César Calderón & Luis Felipe Céspedes & Norman Loayza (Series Editor) & Klaus Sc (ed.),External Vulnerability and Preventive Policies, edition 1, volume 10, chapter 2, pages 015-040, Central Bank of Chile.
    10. Vijay Joshi & Sanjeev Sanyal, 2004. "Foreign Inflows and Macroeconomic Policy in India," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 1(1), pages 135-188.
    11. John Williamson, 2001. "Issues Regarding the Composition of Capital Flows," Development Policy Review, Overseas Development Institute, vol. 19(1), pages 11-29, March.
    12. Ricardo J.Caballero, 2001. "Macroeconomic volatility in Latin America: a view and three case studies," Estudios de Economia, University of Chile, Department of Economics, vol. 28(1 Year 20), pages 5-52, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ashima Goyal, 2012. "The Future Of Financial Liberalization In South Asia," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 19(1), pages 63-96, June.
    2. Kalim SIDDIQUI, 2017. "Capital Liberalisation and Economic Instability," Journal of Economics and Political Economy, KSP Journals, vol. 4(1), pages 14-32, March.
    3. Bai, Caiquan & Yan, Hong & Yin, Shanggang & Feng, Chen & Wei, Qian, 2021. "Exploring the development trend of internet finance in China: Perspective from club convergence," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    4. Kalim Siddiqui, 2015. "Challenges for Industrialisation in India: State versus Market Policies," Research in World Economy, Research in World Economy, Sciedu Press, vol. 6(2), pages 85-98, June.
    5. Partha Sen, 2022. "Macroeconomic Policy and Development in India: Some Analytical Issues," CESifo Working Paper Series 10175, CESifo.
    6. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    7. Goyal, Ashima, 2010. "Inflows and policy: middling through," MPRA Paper 39868, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jeffrey Frankel, 2011. "A Comparison Of Product Price Targeting And Other Monetary Anchor Options, For Commodity Exporters In Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2011), pages 1-70, August.
    2. Mr. Luis Catão & Sandeep Kapur, 2004. "Missing Link: Volatility and the Debt Intolerance Paradox," IMF Working Papers 2004/051, International Monetary Fund.
    3. Guillermo Ortiz, 2000. "How should monetary policymakers react to the new challenges of global economic integration: commentary," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 255-276.
    4. Luis Catão & Sandeep Kapur, 2006. "Volatility and the Debt-Intolerance Paradox," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 1-1.
    5. Berument, M. Hakan & Dincer, N. Nergiz & Mustafaoglu, Zafer, 2012. "Effects of growth volatility on economic performance – Empirical evidence from Turkey," European Journal of Operational Research, Elsevier, vol. 217(2), pages 351-356.
    6. Chami Ralph & Hakura Dalia S. & Montiel Peter J., 2012. "Do Worker Remittances Reduce Output Volatility in Developing Countries?," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-25, June.
    7. Christiano, Lawrence J. & Gust, Christopher & Roldos, Jorge, 2004. "Monetary policy in a financial crisis," Journal of Economic Theory, Elsevier, vol. 119(1), pages 64-103, November.
    8. Alexis Saludjian, 2006. "Flux de Capital et Intégration Régionale : Une Etude Econométrique des Principaux Déterminants de l'Instabilité Macro-économique dans le Cône Sud-Américain," Post-Print hal-00118214, HAL.
    9. Jaime Guajardo, 2004. "Financial Frictions and Business Cycles in Developing Countries," Econometric Society 2004 Latin American Meetings 307, Econometric Society.
    10. Jeffrey A. Frankel, 2010. "A Comparison of Monetary Anchor Options, Including Product Price Targeting, for Commodity-Exporters in Latin America," NBER Working Papers 16362, National Bureau of Economic Research, Inc.
    11. Marco A. Espinosa-Vega & Alessandro Rebucci, 2004. "Retail Bank Interest Rate Pass-through: Is Chile Atypical?," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Antonio Ahumada & J. Rodrigo Fuentes & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking Market Structure and Monetary Policy, edition 1, volume 7, chapter 5, pages 147-182, Central Bank of Chile.
    12. Paola Caselli & Andrea Zaghini, 2005. "International specialization models in Latin America: the case of Argentina," Temi di discussione (Economic working papers) 558, Bank of Italy, Economic Research and International Relations Area.
    13. Jaume Ventura & Fernando Broner, 2008. "Rethinking the effects of financial liberalization," 2008 Meeting Papers 747, Society for Economic Dynamics.
    14. Alexis Saludjian, 2004. "Trajectoires de croissance et volatilité macroéconomique dans le Mercosur : quelques éléments d'analyse empirique," Revue Tiers Monde, Programme National Persée, vol. 45(179), pages 595-615.
    15. Ricardo Hausmann & Roberto Rigobon, 2003. "An Alternative Interpretation of the 'Resource Curse': Theory and Policy Implications," NBER Working Papers 9424, National Bureau of Economic Research, Inc.
    16. Barari, Mahua, 2004. "Equity market integration in Latin America: A time-varying integration score analysis," International Review of Financial Analysis, Elsevier, vol. 13(5), pages 649-668.
    17. Fernando Broner & Jaume Ventura, 2016. "Rethinking the Effects of Financial Globalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1497-1542.
    18. Fanelli, José María & Jiménez, Juan Pablo, 2009. "Crisis, volatility and fiscal policy in Latin America," Documentos de Proyectos 4167, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Fabrizio Onida, 2004. "Crescita e vincolo esterno: quali strategie per promuovere stabilità macroeconomica, competitività e investimenti," KITeS Working Papers 157, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2004.
    20. Carlos Budnevich, 2002. "Countercyclical Fiscal Policy: A Review of the Literature, Empirical Evidence and some Policy Proposals," WIDER Working Paper Series DP2002-41, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:23:y:2007:i:2:p:292-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oxrep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.