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Policy Tradeoffs in an Open Economy and the Role of G-20 in Global Macroeconomic Policy Coordination

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  • Rajeswari Sengupta
  • Abhijit Sen Gupta

Abstract

In this paper the aim is to investigate the different nuances of India's capital account management through empirical analyses as well as descriptive discussions. In particular the study the evolution of the capital control regime in India since 1991, and explore the rationale behind liberalizing certain flows, restricting others and the means employed to do so. Increased integration with global financial markets has amplified the complexity of macroeconomic management in India. It also analyse the trade-offs faced by Indian policy makers between exchange rate stability, monetary autnomy and capital account opnenness, within the framework of the well-known Impossible Trinity or Trilemma and find that over time India has adopted an intermediate regime balancing the different policy objectives while at the same time accumulating massive international reserves.

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  • Rajeswari Sengupta & Abhijit Sen Gupta, 2015. "Policy Tradeoffs in an Open Economy and the Role of G-20 in Global Macroeconomic Policy Coordination," Working Papers id:7663, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:7663
    Note: Institutional Papers
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    Cited by:

    1. Padhan, Hemachandra & Sahu, Santosh Kumar & Dash, Umakant, 2021. "Non-linear analysis of international reserve, trade and trilemma in India," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).
    2. Nidhi Aggarwal & Sanchit Arora & Rajeswari Sengupta, 2022. "Capital account openness in India and a comparison with China: Then versus now," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2022-005, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Nidhi Aggarwal & Sanchit Arora & Rajeswari Sengupta, 2021. "Capital account liberalisation in a large emerging economy: An Analysis of onshore-offshore arbitrage," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2021-013, Indira Gandhi Institute of Development Research, Mumbai, India.

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    More about this item

    Keywords

    policy; tradeoff; G-20; policy coordination; India; Capital controls; Macroeconomic trilemma; Financial integration; Foreign exchange intervention; Sterilization; Exchange market pressure; Reserve adequacy; Exchange Rate Stability; (ERS); Capital Account Openness ; EMP Indices; monetary autnomy;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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