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Liberalization of Capital Inflows and the Real Exchange Rate in India: A VAR Analysis

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  • Indrani Chakraborty

Abstract

The East Asian crisis of 1997-98 and the Mexican crisis of 1994 generated much concern among policy analysts regarding the role of macroeconomic policies in the management of capital inflows. A series of economic reform measures including liberalization of foreign capital inflows were initiated in India since the early nineties. Using the vector autoregression (VAR) method, this paper specifically examines if the external shock generated by capital inflows led to appreciation in the real exchange rate as observed in the East Asian and Latin American countries in the 1990’s. [Working Paper No. 351]

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  • Indrani Chakraborty, 2010. "Liberalization of Capital Inflows and the Real Exchange Rate in India: A VAR Analysis," Working Papers id:3032, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:3032
    Note: Institutional Papers
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    References listed on IDEAS

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    1. Sebastian Edwards, 2000. "Capital Flows, Real Exchange Rates, and Capital Controls: Some Latin American Experiences," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 197-246, National Bureau of Economic Research, Inc.
    2. José De Gregorio, 2000. "Comment on "Capital Flows, Real Exchange Rates, and Capital Controls: Some Latin American Experiences"," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 247-253, National Bureau of Economic Research, Inc.
    3. Calvo, Guillermo A & Mendoza, Enrique G, 1996. "Petty Crime and Cruel Punishment: Lessons from the Mexican Debacle," American Economic Review, American Economic Association, vol. 86(2), pages 170-175, May.
    4. Sebastian Edwards, 2000. "Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies," NBER Books, National Bureau of Economic Research, Inc, number edwa00-1.
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