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New issues in Indian macro policy

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  • Ajay Shah

Abstract

For many decades, macro-policy in India was conducted in an environment with five key elements: Agricultural shocks rather than a conventional business cycle; A closed economy; deeply distortionary tax policy coupled with a fiscal crisis; financial markets that lacked speculative price discovery, and a monetary policy which was shaped by deficit financing. The paper argues that India has changed beyond recognition on all these five elements and that these changes have far-reaching consequences for the conduct of macroeconomic policy. India is now a more conventional market economy, and there is a much bigger role for the great themes of macroeconomics - as it is practised elsewhere in the world - in shaping Indian macro policy. [NIPFP-WP]

Suggested Citation

  • Ajay Shah, 2008. "New issues in Indian macro policy," Working Papers id:1478, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:1478
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    References listed on IDEAS

    as
    1. Mr. Ananthakrishnan Prasad & Mr. Adarsh Kishore, 2007. "Indian Subnational Finances: Recent Performance," IMF Working Papers 2007/205, International Monetary Fund.
    2. Norbert Janssen & Charles Nolan & Ryland Thomas, 2004. "Money, Debt and Prices in the UK 1705-1996," CDMA Working Paper Series 200407, Centre for Dynamic Macroeconomic Analysis.
    3. M. S. Mohanty & Marc Klau, 2005. "Monetary Policy Rules in Emerging Market Economies: Issues and Evidence," Springer Books, in: Rolf J. Langhammer & Lúcio Vinhas Souza (ed.), Monetary Policy and Macroeconomic Stabilization in Latin America, pages 205-245, Springer.
    4. Rajaraman, Indira, 2004. "Fiscal restructuring in the context of trade reform," Working Papers 04/7, National Institute of Public Finance and Policy.
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    6. Vijay Joshi, 2003. "India and the Impossible Trinity," The World Economy, Wiley Blackwell, vol. 26(4), pages 555-583, April.
    7. Elena Glinskaya & Michael Lokshin, 2007. "Wage differentials between the public and private sectors in India," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(3), pages 333-355.
    8. Rao, M. Govinda, 2005. "Tax system reform in India: Achievements and challenges ahead," Journal of Asian Economics, Elsevier, vol. 16(6), pages 993-1011, December.
    9. Edward Nelson, 2004. "The U.K.s rocky road to stability," Monetary Trends, Federal Reserve Bank of St. Louis, issue Oct.
    10. repec:npf:wpaper:07 is not listed on IDEAS
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Structural transformation and stylised business cycle facts
      by Ajay Shah in Ajay Shah's blog on 2013-05-18 11:13:00

    Citations

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    Cited by:

    1. Eswar S. Prasad, 2009. "India’s Approach to Capital Account Liberalization," Working Papers id:2043, eSocialSciences.
    2. Rajeswari Sengupta, 2015. "The Impossible Trinity: Where does India stand?," Working Papers id:6659, eSocialSciences.
    3. Prasad, Eswar S., 2009. "Some New Perspectives on India’s Approach to Capital Account Liberalization," India Policy Forum, National Council of Applied Economic Research, vol. 5(1), pages 125-178.
    4. Ms. Prachi Mishra & Mr. Peter J Montiel & Rajeswari Sengupta, 2016. "Monetary Transmission in Developing Countries: Evidence from India," IMF Working Papers 2016/167, International Monetary Fund.
    5. repec:pra:mprapa:39771 is not listed on IDEAS
    6. Ajay Shah & Ila Patnaik, 2010. "Managing Capital Flows: The Case of India," Chapters, in: Masahiro Kawai & Mario B. Lamberte (ed.), Managing Capital Flows, chapter 9, Edward Elgar Publishing.
    7. Joshua Aizenman & Rajeswari Sengupta, 2013. "Financial Trilemma in China and a Comparative Analysis with India," Pacific Economic Review, Wiley Blackwell, vol. 18(2), pages 123-146, May.
    8. Hutchison, Michael M. & Sengupta, Rajeswari & Singh, Nirvikar, 2013. "Dove or Hawk? Characterizing monetary policy regime switches in India," Emerging Markets Review, Elsevier, vol. 16(C), pages 183-202.
    9. Paunic, Alida, 2009. "I did it my way," MPRA Paper 17547, University Library of Munich, Germany.
    10. Prasad, Eswar, 2009. "India's Approach to Capital Account Liberalization," IZA Discussion Papers 3927, Institute of Labor Economics (IZA).

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