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Exchange Rate Regimes and Macroeconomic Performance in South Asia

  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

Stylized facts for South Asia show the dominance of supply shocks, amplified by macroeconomic policies and procyclical current accounts. Interest and exchange rate volatility rose initially on liberalization, but fell as markets deepened. A gradual middling through approach to openness and market development are helping the region absorb shocks without reducing growth. Diverse sources of demand, flexible exchange rates, robust domestic savings, and changing political preferences are contributing. Countercyclical policy more suited to structure, and removal of distortions raising costs, would allow better coordination of monetary and fiscal polices to further support the process.

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Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 22779.

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Date of creation: Jan 2010
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Handle: RePEc:eab:macroe:22779
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  1. Goyal, Ashima, 2010. "Sustainable debt and deficits in emerging markets," MPRA Paper 40100, University Library of Munich, Germany.
  2. Goyal, Ashima & Pujari, Ayan Kumar, 2005. "Identifying long run supply curve of India," MPRA Paper 24021, University Library of Munich, Germany.
  3. Goyal, Ashima, 1999. "The Political Economy of the Revenue Deficit," MPRA Paper 29980, University Library of Munich, Germany.
  4. Ashima Goyal, 2007. "Tradeoffs, Delegation and Fiscal-Monetary Coordination in a Developing Economy," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 42(2), pages 141-164, December.
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