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Consumption accounts for more than 70% of GDP in both Pakistan and India and both countries face high debt to GDP ratio as well as current account deficit. Consequently, exchange rates are usually volatile and they directly affect major economic indicators in the respective countries. Therefore, this study examines the impact of the exchange rate and its volatility on consumption in Pakistan and India using the time series data from 1980 to 2018. The empirical models differentiate between real and nominal variables to isolate the impact of inflation pass‐through. The long‐run and short‐run relationships are identified using the autoregressive distributive lag cointegration method. The results show that real and nominal exchange rates do not have a significant relationship with consumption in Pakistan. Whereas, in India, an increase in real exchange rate increases consumption while an increase in the nominal exchange rate reduces consumption, indicating inflation pass‐through. The volatility of the real exchange rate has a positive relationship with consumption in Pakistan. In India, the volatility of the nominal exchange rate has a negative relationship with consumption; showing the presence of inflation pass‐through effect in India. Our results show that domestic consumption in India is more prone to external shocks as compared to Pakistan, most probably due to a relatively higher degree of openness. Our results suggest that there is a long‐run relationship between exchange rate volatility and consumption in both countries and the stabilization of the exchange rate can improve the sustainability of consumption in both India and Pakistan. [ABSTRACT FROM AUTHOR]

In the present globalization economic world, exchange rate plays a major role in every country's economic activity. Here, exchange rate policy has been identified as one of the endogenous factors that can affect the economic performance of a nation. Exchange rate plays a key role in international economic transactions because no nation can remain in isolation due to varying factor endowment. Movements in the exchange rate have ripple effects on other economic growth. The study used secondary data that were collected from the World Development Indicators data base and analysed. The study used the ordinary least square and VECM Granger Causality method of estimation for data covered the period from 1990 to 2017. The results from the econometric analyses show that there is a short‐run relationship between exchange rate, inflation rate, interest rate and GDP. The result obtained from the unit root analysis indicates that least one time series variable property is stationary. The study concludes that in India, the factors that influence the level of growth rate are extent of exchange rate and its variables. Based on the findings, from the Granger causality investigation procedure at 5% critical value are EXCH, INT, INF, IMP and EXP among other variables that affect economic growth. The study recommends the need to be technologically inclined in all sectors of Indian economy; excess and over budgetary inflation and implementation should be cut to barest minimal level to avert the ideal of external borrowing which most consequently result in external debt and services. The Indian government should show the path of redirecting its investment profile by channelling it towards capital projects of the government. [ABSTRACT FROM AUTHOR]

The appeal of Monetary Conditions Index either as an operating target or a monetary policy rule has waned over time. Its utility for assessing the monetary policy stance through the lens of alternative channels of monetary policy transmission, however, continues. This paper attempts to construct MCIs for India by approximating four major channels of transmission - interest rate, exchange rate, credit, and asset prices - and examine their suitability to assess the stance of monetary policy as well as the inflation outlook. The weights for these MCIs have been derived using ordinary least squares (OLS) as well as by employing impulse responses of shocks within a structural vector autoregression (SVAR) framework. Empirical findings establish the dominant influence of the interest rate channel in India and support MCIs as useful coincident indicators of monetary policy stance and as a relevant lead indicator of inflation. [ABSTRACT FROM AUTHOR]

The study investigates the relationships between exchange rate and stock price over the period January 2007 to March 2014. Index National Stock Exchange, namely, NIFTY is used as indicator of stock price. Johansen's co-integration and Granger causality test have been applied to explore the long-run and short-run equilibrium relationship between exchange rate and stock price. The analysis reveals that exchange rate and stock price are co-integrated and, hence, a long-run equilibrium relationship exists between them. It is observed that the exchange rate and NIFTY as indicators of stock price are positively related to each other. The exchange rate is found to be significant in determining stock price and stock price significantly affects exchange rate. In the Granger-causality sense, exchange rate Granger-causes stock price and stock price Granger-causes exchange rate, or there is bi-directional causality between exchange rate and stock price in both long run and short run. [ABSTRACT FROM AUTHOR]

Mundell-Fleming model of open economy macroeconomics has amply established that the nature and direction of causal relationship between money supply and exchange rate depend on the exchange rate regimes. Particularly bidirectional causal relation between domestic money supply and exchange rate is the common phenomenon in the pegged regime of exchange rate, while unidirectional causality running from money supply to exchange rate is the feature of the market determination regime. This study is devoted to enquire into these issues in the context of Indian exchange rate regimes. Using quarterly time series data of the variables concerned, the study bears the evidence that under the basket peg and market determination exchange rate regimes money supply and rupee/dollar exchange rate in India are cointegrated. In the era of basket peg, bidirectional Granger causality is established, while in the era of market determined regime, unidirectional Granger causality running from money supply to exchange rate has been testified. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to re-examine the empirical relationship among alternative monetary aggregates (Ml and M2), output, prices, interest rates and exchange rates in India. The results of a five-variate vector error correction model are indicative of a bi-directional causality between each of the monetary aggregates and prices. Our findings of a feedback relationship make each of the monetary aggregates a poor intermediate target and informational variable. Moreover, contrary to most recent research in this area, the results are supportive of the real business-cycle view and the Keynesian monetary accommodation hypothesis rather than the monetarists' theory of the business cycle. [ABSTRACT FROM AUTHOR]

Presents an overview on the Indian economy in 2005-05. Factors behind the deceleration of gross domestic product growth in the second quarter of 2005; Steps taken by the government to keep inflation under control; Trend in the exchange rate of rupee with the U.S. dollar.

Presents charts on economic indicators of several non-member countries of the Organisation for Economic Co-operation & Development from 2000 to 2004. Unemployment rate of Brazil; Imports and exports of China; Exchange rates of India.

Presents several charts of economic indicators for Organisation for Economic Cooperation & Development non-member countries from 2000 to 2003. Balance of payments in Brazil; Interest rates in China; Exchange rates in India.

The article discusses the long-term economic growth of India between 1870 and 1970. The major point examined by the authors is the consistency of various estimates of long-term Indian economic growth within a comparative framework, where comparisons are made with experience in the U.S. The contemporary experience of India and the U.S. is used as a criteria to examine Indian historic growth in the light of likely structural changes in the two economies during the past century. The national growth rates of India and the U.S. for 1870 is 9.1 percent at exchange rates, or an eleven-fold gap. If this difference were to be closed in fifty years with the U.S. growing at 1 percent per capita, it would have required India to grow at 5.8 percent per capita. Another feature of the India-U.S. comparisons is that apparently the differential between exchange rate and purchasing power parities (PPP) estimates of relative income has increased. This is consistent with contemporary cross sections where the difference between PPP and the exchange rate is directly proportional to the difference in real income between the countries.