The real exchange rate in India: determinants and targeting

Patel, U. and Srivastava, P. (1997) The real exchange rate in India: determinants and targeting. CEPDP, 323. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 075301095X

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Abstract

This paper studies the behaviour of the real exchange rate (RER) in India. The first part investigates the role of important macroeconomic (behaviour and policy) variables in explaining the movement of the RER. It is found that the investment-gdp ratio, the overall fiscal deficit of the public sector and the nominal exchange rates are important explanatory variables. The second part of the paper seeks to determine whether real exchange rate targeting has been used in India as a tool in enhancing the competitiveness of the tradable sector. It is found that this is indeed the case, and moreover, the correlation between inflation and nominal devaluations is found to be small.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 1997 the authors
Library of Congress subject classification:	H Social Sciences > HG Finance
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP)
Identification Number:	323
Date Deposited:	02 Aug 2008 12:30
URL:	http://eprints.lse.ac.uk/20360/

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