Macroeconomic Policy and Development in India: Some Analytical Issues

Partha Sen

No 10175, CESifo Working Paper Series from CESifo

Abstract: Should a developing economy, such as India, have a macroeconomic policy framework that is identical to an advanced capitalist country? The answer is a “No”, because the developing economies have external constraints, that the more developed countries do not. They also, often, need to achieve a structural transformation by moving labour away from agriculture. These economies are, in addition, faced with possibility of international capital flow reversals. I argue for keeping the real exchange depreciated to have an export-led growth, emulating the East Asian experience. In today’s world, given protectionism in the advanced capitalist countries, this strategy is more challenging. Also the capacity of the State to deliver this is open to question.

Keywords: inflation targeting; big push; exchange rates; structural transformation (search for similar items in EconPapers)
JEL-codes: E60 O10 O40 (search for similar items in EconPapers)
Date: 2022
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