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Policy Tradeoffs in an Open Economy and the Role of G-20 in Global Macroeconomic Policy Coordination

Rajeswari Sengupta () and Abhijit Sen Gupta

Working Papers from eSocialSciences

Abstract: In this paper the aim is to investigate the different nuances of India's capital account management through empirical analyses as well as descriptive discussions. In particular the study the evolution of the capital control regime in India since 1991, and explore the rationale behind liberalizing certain flows, restricting others and the means employed to do so. Increased integration with global financial markets has amplified the complexity of macroeconomic management in India. It also analyse the trade-offs faced by Indian policy makers between exchange rate stability, monetary autnomy and capital account opnenness, within the framework of the well-known Impossible Trinity or Trilemma and find that over time India has adopted an intermediate regime balancing the different policy objectives while at the same time accumulating massive international reserves.

Keywords: policy; tradeoff; G-20; policy coordination; India; Capital controls; Macroeconomic trilemma; Financial integration; Foreign exchange intervention; Sterilization; Exchange market pressure; Reserve adequacy; Exchange Rate Stability; (ERS); Capital Account Openness; EMP Indices; monetary autnomy (search for similar items in EconPapers)
Date: 2015-10
Note: Institutional Papers
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Working Paper: Policy tradeoffs in an open economy and the role of G-20 in global macroeconomic policy coordination (2015) Downloads
Working Paper: Policy Tradeoffs in an Open Economy and the Role of G-20 in Global Macroeconomic Policy Coordination (2013) Downloads
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