HomeDespre ECTAEventsPolitica editorialaTrimite un articolParteneri / link-uri utileArchiveAbonamentContact

ISSN 1841-8678   (print)
ISSN 1844-0029   (online)


Archive ECTAP

Note: for the period 1994-2003 the archive of the magazine will not be available online

Supplements ECTAP

If you cannot open the pdf file you need Adobe Reader.
download Adobe Reader

Creative Commons License

Theoretical and Applied Economics
No. 1 / 2021 (626), Spring

Capital account liberalisation in India: Volatility of capital flows and selective policy issues

Shivangi JAISWAL
NMIMS University, Bangalore, India
NMIMS University Bangalore, India

Abstract. This paper attempts to investigate the relationship between capital account openness and occurrence of financial risks in India by employing finite distributed lag model. Annual data from 1979 to 2018 on real effective exchange rate, real interest rate, international reserve and net capital have been used to compute Exchange Market Pressure index and the degree of capital account liberalization. The study finds that opening up of capital account will have harmful effects on the financial stability of the country in the initial years, say a year or two. However, the degree of financial risks will go down in later years by influencing capital inflows. Finally, the study has suggested that the Reserve Bank of India needs to take precautionary measures to mitigate short term volatility of capital flows before choosing fuller capital account convertibility.

Keywords: capital account liberalization, financial stability, real exchange rate, real interest rate, foreign exchange reserve, finite distributed lag model.

Download the full article:  


Open acces




The Economicity. The Epistemic Landscape, Marin Dinu, 2016


ISSN 1841-8678 (ediția print) / ISSN 1844-0029 (ediția online)
© Copyright Asociația Generală a Economiștilor din România (AGER) / General Association of Economists From Romania  (GAER)
Redacția: 010702, București, Calea Griviței nr. 21, sector 1, E-mail:

© 2006-2021 AGER