Foreign Inflows And Macroeconomic Policy In India
- Topics:
- Foreign Direct Investment
- Source:
- University of Oxford
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Overview: How should macroeconomic policy in India respond to the dramatic strengthening of the balance of payments in the current decade? This controversial subject of contemporary Indian debate is addressed below. The paper begins with an assessment of the external aspects of India's macroeconomic management in the 1990s. It proceeds to examine the sources of the balance-of-payments improvement, then to analyze various relevant policy alternatives, and finally to delineate the contours of the optimal policy mix. It is argued that the appropriate response to the strength of the balance of payments is a judicious combination of policies rather than a "Corner solution," particularly one in which appreciation of the real exchange rate is used exclusively.
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Format: PDF | Size: 217KB | Date: Aug 2006 | Pages: 54






