ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Foreign Direct Investment, Portfolio Investment and Macro-Economic Stability

and Macro-Economic Stability Ranjit Sau Foreign capital comes in two forms: direct foreign investment (DFl) and foreign portfolio investment (FPI). This paper presents a simple model to examine the conditions of stability with the inflow of foreign capital We find that the equilibrium is most likely to be stable if the interest-elasticity of DFl is high andthqt of FPI is low. The experience of India, however, indicates that the situation here is just the reverse that implies the possibility of instability.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top