Growth Volatility and Financial Repression: Time Series Evidence from India

Ang, James (2009): Growth Volatility and Financial Repression: Time Series Evidence from India.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Growth volatility; financial repression; India
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy

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