Macro/Finance Group, NIPFP

Indian macroeconomics has been transformed in a short period of the last 20 years. An inflexible and closed economy has transitioned into an open market economy, with financial markets playing a vital role in processing information, sending information signals to the private sector, and shaping resource allocation. In 1992, GDP was $240 billion and gross flows across the boundary were $97 billion. Both values now exceed $1.5 trillion dollars a year. Capital flows now loom large in their impact on both finance and macroeconomics.

This calls for new thinking in macroeconomics and finance. Are traditional policy reflexes adequate? Should India protect itself from the dangers of globalisation with an array of capital controls? Or should India move forward towards the arrangements of successful emerging markets and ultimately the developed countries? These grand questions need to be addressed based on a combination of open economy macroeconomics and international finance. Alongside conceptual thinking and international experience, empirical evidence in India is of crucial importance.

The three corners of the impossible trinity loom large in this thinking: the exchange rate regime, capital flows and capital controls, and monetary policy. But at the same time, these policy questions are located in the larger problem of fiscal, financial and monetary policy reform.

The Macro/Finance Group at NIPFP aspires to make a contribution in these areas, with a mix of quantitative research papers in academic journals, policy papers, ongoing analysis of macroeconomic policy and public policy work including legal work.

To track our activities, watch our blog.