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Spillover effects of the US monetary policy on the Indian trilemma

Harpreet Singh Grewal (Foreign Exchange Department, Reserve Bank of India, Mumbai, India)
Pushpa Trivedi (Humanities and Social Sciences, Indian Institute of Technology Bombay, Mumbai, India)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 7 April 2021

Issue publication date: 2 January 2023




The purpose of this paper is to investigate the impact of the US unconventional monetary policy surprises on the management of trilemma in India.


This paper uses the event study approach along with OLS and MANOVA to examine the impact.


The results validate the existence of trilemma in India for the period from October 2008 to December 2017. The results also show that monetary policy independence still exists in India in the wake of greater spillover effects during the Federal Open Market Committee announcement days. The spillover effects on USD-INR exchange rates and capital flows are found to be statistically significant. The MANOVA results show that the trilemma in India is influenced by around 20% by the changes in the US monetary policy.


The above approach of event study combined with MANOVA in this subject area has not been used before to the best of the authors’ knowledge. Further, there are only a few studies that exist on the spillover effects of the US monetary policy actions on the management of trilemma in India.



Disclaimer: The views expressed in this paper are of the authors and not of the institutions to which they belong.


Grewal, H.S. and Trivedi, P. (2023), "Spillover effects of the US monetary policy on the Indian trilemma", International Journal of Emerging Markets, Vol. 18 No. 1, pp. 102-121.



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