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Capital Flows and Their Macroeconomic Effects in India

Author/Editor: Kohli, Renu
Authorized for Distribution: December 1, 2001
Electronic Access: Free Full Text (PDF file size is 1,724KB)
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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 documents trends in movement and composition of capital flows into India in a comparative perspective, examines the impact of these flows upon key macroeconomic variables in the economy, and dwells on implications for economic policy. We find that an inflow of foreign capital results in a real appreciation and has a significant impact on domestic money supply. During a capital surge, these effects have been countered through intervention and sterilization. The paper concludes with a discussion on the costs of these policies in the event of a heavy inflow of foreign capital into India.
 
Series: Working Paper No. 01/192
Subject(s): Capital flows | India | Capital account | Real effective exchange rates | Intervention | Capital controls | Money supply | Foreign exchange reserves
Author's keyword(s): Capital flows | capital account | real exchange rate | foreign exchange reserves | intervention | money supply | sterilization
 
English  
    Published:   December 1, 2001        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA1922001   Pages:   36
    Price:   US$15.00
       
     
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