Capital flows, financial asset prices and real financial market exchange rate: A case study for an emerging market, India

Arbeitspapier

In this paper we empirically investigate the relationship between capital flows and exchange rates in India based on a new index of real effective exchange rates for the Indian Rupiah. Instead of using consumer price indices we deflate exchange rates by MSCI asset price indices. The cointegration analysis indicates a long-run equilibrium relationship between our real financial market exchange rate and the net outstanding equity investment in India. In the short run capital inflows are accompanied by an appreciation of real financial exchange rate of the Rupiah.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Advanced Studies Working Papers ; No. 461

Classification and Topics

• Classification: Wirtschaft ; Foreign Exchange ; International Financial Markets ; Central Banks and Their Policies
• Subject: Real Exchange Rate ; Capital Flows ; Financial Asset Prices ; Emerging Financial Markets ; India

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ghosh, Saurabh ; Reitz, Stefan
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/62345
• Last update: 10.03.2025, 11:43 AM CET