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Capital Controls, Exchange Market Intervention and International Reserve Accumulation in India

Author

Listed:
  • Naveen Srinivasan

    () (Madras School of Economics)

  • Vidya Mahambare

    () (Great Lakes Institute of Management, Chennai)

  • M. Ramachandran

    () (Professor, Department of Economics, Pondicherry University)

Abstract

The build up of international reserves by many Asian countries over the last decade or so has attracted widespread interest and debate. This paper seeks to make a contribution to this discussion from the point of view of India. The empirical results are designed to identify the extent to which the accumulation of reserves in India has been driven by two motives which are commonly identified with respect to the recent accumulation of reserves by the Asian EMEs, namely a demand to have insurance against external shocks and a demand to have a high level of export competitiveness, so as to have export-led growth. Our results provide evidence in support of both the motives in explaining India’s international reserves accumulation strategy, although, their relative importance does seem to vary overtime depending on external factors. This in turn offers some helpful insights into the causes and likely future path of the global imbalances.

Suggested Citation

  • Naveen Srinivasan & Vidya Mahambare & M. Ramachandran, 2015. "Capital Controls, Exchange Market Intervention and International Reserve Accumulation in India," Working Papers 2015-103, Madras School of Economics,Chennai,India.
  • Handle: RePEc:mad:wpaper:2015-103
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    File URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-103.pdf
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    References listed on IDEAS

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    1. repec:dug:actaec:y:2017:i:4:p:5-14 is not listed on IDEAS

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    Keywords

    Reserve accretion; Capital controls; Exports competitiveness;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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