Theoretical and Applied Economics
No. 3 / 2017 (612), Autumn
Evaluating Indian economy’s vulnerability to currency crisis
Indian Institute of Technology Bombay, India
Puja PADHI
Indian Institute of Technology Bombay, India
Abstract. This paper examines India’s exposure to currency crisis for the period 1986 to 2015 using KLR (Kaminsky, Lizondo and Reinhart) methodology. Focus of the study is on evaluating currency crises and building an Early Warning System (EWS) to anticipate future crises. Using KLR methodology we explain the phenomenon of currency crises over three stages – identification of the crises periods, selection of the variables causing the crisis based on previous literature and economic structure, and estimating indicators’ ability to forecast the crisis. The following are identified as crisis periods: 1991, 2008-2009 and 2012. Among these crises, 1991 crisis was attributed to fiscal mismanagement, global financial crisis caused the 2008 currency slump whereas 2012 crisis occurred due to domestic macroeconomic imbalances. A surprising finding is that there were no common indicators issuing signals in these three spells of crises.
Contents
The European Union's strategy for increasing the living conditions of the population in the member states
Does institutional environment affect the economic development? Evidence from selected CEE countries
Causality between economic policy uncertainty and exchange rate in China with considering quantile differences
An agency theory approach on Romanian listed companies’ capital structure
What impact has free trade area on economies of ASEAN-5 countries?
Is more government debt or currency depreciation expansionary? The case of Poland
Long-memory, self-similarity and scaling of the long-term government bond yields: Evidence from Turkey and the USA
Hard currency inflows and sterilization policy in Algeria: An ARDL approach
Evaluating Indian economy’s vulnerability to currency crisis
Impact of fiscal responsibility legislations on state finances in India
Does fiscal policy spur economic growth? Empirical evidence from Algeria
Financial conditions index (FCI), inflation and growth: Some evidence
On the effects of total productivity growth of economic freedom and total resource rents: The case of both natural resource rich and OECD countries