Article ID Journal Published Year Pages File Type
964718 Journal of International Money and Finance 2011 18 Pages PDF
Abstract

The main objective of this paper is to explore the determinants of private consumption growth volatility in India, focusing on the role of financial sector policies. Using data for India over the period 1950–2005, the results show that the implementation of financial repressionist policies is strongly associated with lower consumption volatility. The results remain robust after controlling for a wide range of macroeconomic shocks and variables. The presence of a threshold effect implies that the benefits of financial reforms in reducing consumption volatility can only be reaped when the financial system becomes sufficiently liberalized. The results also indicate that the presence of a more open financial system may serve to dampen fluctuations in private consumption.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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