Autore
Nachane, D. M.

Titolo
Financial liberalisation and monetary policy: the Indian evidence.
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 2001 - Fascicolo: 11 - Pagina iniziale: 1 - Pagina finale: 31

It is generally hypothesised that the efficacy of monetary policy is seriously jeopardised by financial liberalisation. However, the empirical evidence to test this proposition is somewhat scanty, especially for LDCs. In this paper, we use an SVAR type model to derive certain causal measures, which can prove useful as indicators of monetary policy potency. Bootstrapping experiments are then conducted to test whether liberalisation has weakened the role of monetary policy in India. We find an attenuation of the relationship between the monetary base and money supply as well as that between money and nominal income. Our results can thus be interpreted as supportive of the hypothesis.




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