"Since the liberalisation of the Indian economy in 1991 the country has experienced sustained current account deficits. These deficits were serviced by a massive influx of capital inflows, made possible by the gradual removal of or reduction in restrictions on foreign investments since 1991....

Since a series of crisis events after 2007, the discussion about the adjustment channels of current account imbalances has been revived. We discuss the effectiveness of exchange rates versus macroeconomic policies to rebalance current accounts for a set of 86 mainly emerging market economies. We...