Growth Volatility and Financial Repression: Time Series Evidence from India

James Ang

MPRA Paper from University Library of Munich, Germany

Abstract: The main objective of this paper is to explore the determinants of private consumption volatility in India. While considerable effort has been expended on the examining the relationship between growth and volatility, we focus on financial repression and private consumption volatility in India. Using annual time series data, the results show that the implementation of financial repressionist policies are strongly associated with lower consumption volatility in India. The results remain robust after controlling for a wide range of macroeconomic shocks and variables. Additional analysis which involves examining each component of private consumption provides further evidence to support this finding. The presence of a threshold effect suggests that the benefits of financial openness in dampening consumption volatility can only be reaped when India becomes sufficiently liberalized.

Keywords: Growth volatility; financial repression; India (search for similar items in EconPapers)
JEL-codes: E44 E58 O53 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cwa and nep-mac
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