India: Asset Prices and the Macroeconomy

 
Author/Editor: Purfield, Catriona
 
Publication Date: September 01, 2007
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper examines rising asset prices in India. For the most part, asset prices in India reflect structural factors but the risk of a correction cannot be ruled out. However, at this juncture monetary policy may not be the most effective tool to safeguard financial stability because (i) India's economy is undergoing rapid structural change making it difficult to identify price misalignments; (ii) the macroeconomic impact of an asset price correction is likely to be small; and (iii) the relationship between monetary policy and asset prices is also weak. Targeted changes in financial regulations are better tools to address potential risks.
 
Series: Working Paper No. 07/221
Subject(s): India | Asset prices | Monetary policy

Author's Keyword(s): Asset prices | monetary policy | wealth effects
 
English
Publication Date: September 01, 2007
Format: Paper
Stock No: WPIEA2007221 Pages: 21
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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