Capital Controls, Exchange Market Intervention and International Reserve Accumulation in India

Naveen Srinivasan, Vidya Mahambare () and M Ramachandran ()

Working Papers from Madras School of Economics,Chennai,India

Abstract: The build up of international reserves by many Asian countries over the last decade or so has attracted widespread interest and debate. This paper seeks to make a contribution to this discussion from the point of view of India. The empirical results are designed to identify the extent to which the accumulation of reserves in India has been driven by two motives which are commonly identified with respect to the recent accumulation of reserves by the Asian EMEs, namely a demand to have insurance against external shocks and a demand to have a high level of export competitiveness, so as to have export-led growth. Our results provide evidence in support of both the motives in explaining India’s international reserves accumulation strategy, although, their relative importance does seem to vary overtime depending on external factors. This in turn offers some helpful insights into the causes and likely future path of the global imbalances.

Keywords: Reserve accretion; Capital controls; Exports competitiveness (search for similar items in EconPapers)
JEL-codes: E58 F31 F32 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-04
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mad:wpaper:2015-103

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