The real exchange rate in India: determinants and targeting

U. Patel and P. Srivastava

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper studies the behaviour of the real exchange rate (RER) in India. The first part investigates the role of important macroeconomic (behaviour and policy) variables in explaining the movement of the RER. It is found that the investment-gdp ratio, the overall fiscal deficit of the public sector and the nominal exchange rates are important explanatory variables. The second part of the paper seeks to determine whether real exchange rate targeting has been used in India as a tool in enhancing the competitiveness of the tradable sector. It is found that this is indeed the case, and moreover, the correlation between inflation and nominal devaluations is found to be small.

JEL-codes: F3 G3 (search for similar items in EconPapers)
Pages: 10 pages
Date: 1997-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:20360

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