Financial Development in India: An Empirical Test of the McKinnon–Shaw Model

摘要: India is a case of financial openness. The chapter examines theoretically and empirically, the McKinnon–Shaw model in India. According to McKinnon, basic complementarity exists between money physical capital. predicts that high real interest rate policy will stimulate savings investment promote economic growth. view stands sharp contrast neoclassical Keynesian views which contend lowering Using time-series data for period 40 years (1971–2010), simultaneous equations demand function saving tested with help two-stage least squares (2SLS) ordinary (OLS) technique. Positive significant results are indicated Results support continued liberalization effective macroeconomic management.