Macro/Finance Group, NIPFP

In 2010 and 2011, there has been a fresh wave of interest in capital controls. India is one of the few large countries with a complex system of capital controls, and hence offers an opportunity to assess the extent to which these help achieve goals of macroeconomic and financial policy. We find that the capital controls were associated with poor governance, were unable to sustain the erstwhile exchange rate regime, and did not support financial stability. India's experience is thus inconsistent with the revisionist view of capital controls. Macroeconomic policy in India has moved away from the erstwhile strategies, towards greater exchange rate flexibility combined with capital account liberalisation.

Links

• Journal
• Journal PDF (personal use only)
• Presentation video
• RePEc page

Press

• The trials of Samson Shuttleworth by Ivo Vegter, in the Daily Maverick, 18^thJune 2013.
• Did the Indian capital controls work as a tool of macroeconomic policy? by Ila Patnaik and Ajay Shah, in the VoxEU, 20^thNovember 2012.
• The IMF needs to find its voice again by Sebastian Mallaby, in the Financial Times, 14^thApril 2011.