Budget 2023, Financial Markets and Keynes on Interest Rates: A Study of Short-term Reactions
Published: 2023
Author(s) Name: Satya Prasad Padhi |
Author(s) Affiliation: Department of Economics, Punjab University, Chandigarh.
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Abstract
Imports can generate external
economies for a robust domestic
resurgence in an import-led development
regime, and budgetary
provisions, particularly higher
budgeted capex spending, can
amplify these economic signals.
This may encourage greater domestic
investment, which may be
correlated with greater domestic
real savings (capabilities). However,
the short-term reactions of
the bond and stock markets reveal
that budget signals have not had
much of an impact and the financial
markets expect the pre-budget
growth trajectory. The current
study argued that these issues
have arisen as a result of the persistence
of a high interest rate
policy that disregards broader involvement
in growth and domestic
capacities (and real savings).
As a result, financial markets become
speculative and capital
flows are cautious.
Keywords: N.A.
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