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Do Capital Controls Matter in India?

Author

Listed:
  • Kohli, Renu
  • Belaisch, Agnes

Abstract

No abstract is available for this item.

Suggested Citation

  • Kohli, Renu & Belaisch, Agnes, 2012. "Do Capital Controls Matter in India?," India Policy Forum, National Council of Applied Economic Research, vol. 8(1), pages 225-276.
    • Handle: RePEc:nca:ncaerj:v:8:y:2012:i:2012-1:p:225-276
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2011-12
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    Citations

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    Cited by:

    1. Morgan, Peter J. & Lamberte , Mario, 2012. "Strengthening Financial Infrastructure," ADBI Working Papers 345, Asian Development Bank Institute.
    2. Ma, Guonan & McCauley, Robert N., 2013. "Is China or India more financially open?," Journal of International Money and Finance, Elsevier, vol. 39(C), pages 6-27.

    More about this item

    Keywords

    India’s capital account liberalization began 20 years ago; but a lot of controls still remain. The central bank’s strategy has been to open financial markets cautiously while ensuring risk management systems and competencies are in place to ensure the system’s resilience to foreign shocks. Has the regulation insulated Indian markets from global shocks? This paper estimates uncovered interest parity relationships and finds that capital controls continue to provide a certain degree of autonomy to the central bank when setting policy rates. Vector Autoregressive (VAR) models are constructed to derive impulse response functions illustrating the transmission of a shock to foreign capital inflows through the different segments of India’s financial sector. To provide a sense of the complexity of the regulation on capital account transactions; the paper provides a primer on the controls in place; which it uses to identify coefficient restrictions in the Structural VAR model;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J8 - Labor and Demographic Economics - - Labor Standards
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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