Premium
India and the Impossible Trinity
Author(s) -
Joshi Vijay
Publication year - 2003
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/1467-9701.00537
Subject(s) - trilemma , exchange rate , economics , exchange rate regime , autonomy , capital flows , capital (architecture) , balance (ability) , monetary economics , monetary policy , element (criminal law) , capital account , international economics , macroeconomics , keynesian economics , market economy , political science , liberalization , medicine , archaeology , law , physical medicine and rehabilitation , history
In the 1990s, India responded to the well‐known trilemma of macroeconomic policy by adopting an intermediate exchange rate system combined with selective capital controls. This regime enabled the country to balance exchange rate stability, exchange rate targeting and monetary autonomy, and to weather successfully various shocks that included contagion from the East Asian crisis. India's experience serves to reinforce doubts about the desirability of bipolar exchange rate regimes for developing countries as an integral element of a new international financial architecture.