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Author Kletzer, Kenneth

Title Financial repression and exchange rate management in developing countries : theory and empirical evidence for India / Kenneth Kletzer and Renu Kohli
Published [Washington, D.C.] : International Monetary Fund, Research Dept., ©2001

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Description 1 online resource (41 pages) : illustrations
Series IMF working paper ; WP/01/103
IMF working paper ; WP/01/103.
Summary Most developing countries have imposed restrictions on domestic and international financial transactions at one time or another. Such restrictions have allowed governments to generate significant proportions of their revenues from financial repression while restraining inflation. The eventual fiscal importance of the revenues from seignorage and from implicit taxation of financial intermediation pose a challenge for financial reform and liberalization. This paper presents a model of the role of financial repression in fiscal policy and exchange rate management under capital controls. We show how a balance of payments crisis arises under an exchange rate peg without capital account convertibility in the model economy and how the instruments of financial repression may be used for exchange rate management. The model is compared to the experience of India, a country that exemplifies the fiscal importance of financial restrictions, in the last two decades. In particular, we discuss the dynamics leading up to devaluation in 1991 and the role of financial repression in exchange rate intervention afterwards
Bibliography Includes bibliographical references (pages 39-41)
Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL
digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL
Print version record
Subject Foreign exchange -- India -- Econometric models
Fiscal policy -- India -- Econometric models
Balance of payments -- India -- Econometric models
Capital movements -- India -- Econometric models
Monetary policy -- India -- Econometric models
Balance of payments -- Econometric models.
Capital movements -- Econometric models.
Fiscal policy -- Econometric models.
Foreign exchange -- Econometric models.
Monetary policy -- Econometric models.
India.
Form Electronic book
Author Kohli, Renu
International Monetary Fund. Research Department.