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The downward rigidity of Indian interest rates

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  • Raghbendra Jha

Abstract

This paper tries to assess why lowering interest rates is proving to be hard in India. It singles out the role of three factors: (i) high public debt and the structure of this debt, (ii) the overhang of non-performing assets; and (iii) the policy being pursued with respect to accumulation of foreign exchange reserves. These three factors are causally linked to each other and should not be looked upon as mutually exclusive contributors.

Suggested Citation

  • Raghbendra Jha, 2002. "The downward rigidity of Indian interest rates," ASARC Working Papers 2002-01, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2002-01
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    File URL: https://crawford.anu.edu.au/acde/asarc/pdf/papers/2002/WP2002_01.pdf
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    References listed on IDEAS

    as
    1. Jha, Raghbendra, 2001. "Macroeconomics of Fiscal Policy in Developing Countries," Departmental Working Papers 2001-05, The Australian National University, Arndt-Corden Department of Economics.
    2. Glick,Reuven (ed.), 1998. "Managing Capital Flows and Exchange Rates," Cambridge Books, Cambridge University Press, number 9780521623230, January.
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    Cited by:

    1. Raghbendra Jha, 2004. "Macroeconomic stabilization and pro-poor budgetary policy in the globalized economy," CAMA Working Papers 2004-08, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Bhattacharya, B.B. & Bhanumurthy, N.R. & Mallick, Hrushikesh, 2008. "Modeling interest rate cycles in India," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 899-915.
    3. Biswajit Maitra, 2018. "Determinants of Nominal Interest Rates in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 265-288, March.
    4. Jha, Raghbendra, 2002. "Innovative Sources of Development Finance - Global Cooperation in the 21st Century," Departmental Working Papers 2002-09, The Australian National University, Arndt-Corden Department of Economics.
    5. Raghbendra Jha, 2004. "Innovative Sources of Development Finance: Global Cooperation in the Twenty‐first Century," The World Economy, Wiley Blackwell, vol. 27(2), pages 193-214, February.

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