Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy and Gradual Reforms

Kenneth Kletzer

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

Abstract: Capital account liberalization in financially repressed economies often leads to a period of rapid capital inflows followed by financial crisis. This paper considers the vulnerability of the Indian economy to financial crises with international financial integration and the policy agenda for further liberalization of capital flows. The legacy of financial repression on fiscal and financial policies poses the primary challenge to stable integration of the domestic financial markets of India with international capital markets. Brief overviews of the theory and experience of liberalization elsewhere and of the recent liberalization by India frame the discussion of the risks of liberalization and sequencing of policy reforms.

Date: 2004-07-01
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Related works:
Journal Article: Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy, and Gradual Reforms (2004)
Working Paper: Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy and Gradual Reforms (2004)
Working Paper: Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy and Gradual Reforms (2004)
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