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Macroeconomic policy and the exchange rate: working together?

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  • Goyal, Ashima

Abstract

The chapter reviews the behaviour of the Indian exchange rate over the past few years, and its interactions with the macroeconomic cycle. It examines the extent to which exchange rate policy has been able to contribute to lowering the probability of currency and banking crises, ensuring sustainable internal and external balance, and containing inflation. Given the political economy, more openness, the structural wage-price processes, the degree of backward and forward looking behavior in the Indian economy, the chapter draws out implications for macroeconomic policy. It finds that structure combined with openness actually increases the degrees of freedom and impact of monetary policy.

Suggested Citation

  • Goyal, Ashima, 2006. "Macroeconomic policy and the exchange rate: working together?," MPRA Paper 27768, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27768
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    File URL: https://mpra.ub.uni-muenchen.de/27768/1/MPRA_paper_27768.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ashima Goyal, 2014. "History of Monetary Policy in India Since Independence," SpringerBriefs in Economics, Springer, edition 127, number 978-81-322-1961-3, June.

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    More about this item

    Keywords

    Exchange rate; Indian macroeconomic policy; political economy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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