Foreign Capital, Inflation, Sterilization, Crowding-Out and Growth: Some Illustrative Models

Nirvikar Singh and T. Srinivasan

Santa Cruz Center for International Economics, Working Paper Series from Center for International Economics, UC Santa Cruz

Abstract: This paper discusses some puzzles in the contemporary macroeconomic scene in India, from the perspective of public finance and economic development. These include a fiscal deficit higher than it was during the 1991 crisis, but without a large current account deficit or rise in inflation or interest rates, a rising inflow of external capital, accompanied by the RBI’s sterilizing these inflows and accumulating large reserves, even in the face of low inflation. We offer a critique of some previous analyses, and some models that are suggestive of how real and monetary factors might be integrated in providing a firmer grounding for the policy debates current in India.

Keywords: foreign capital; sterilization; absorption; crowding out; inflation; growth (search for similar items in EconPapers)
Date: 2004-05-01
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Foreign Capital, Inflation, Sterilization, Crowding-Out and Growth: Some Illustrative Models (2004)
Working Paper: Foreign Capital, Inflation, Sterilization, Crowding-Out and Growth: Some Illustrative Models (2004)
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