A Study on the Impact of the Policies of Reserve Bank of India and Federal Reserve System of the United States on Their Respective Economies

Abstract

This abstract summarizes a study that investigates the impact of various policy changes made by central banks on the economies of India and the USA. The focus is on the Reserve Bank of India and the Federal Reserve System of the US. The primary objective is to analyze the relationships between different economic factors and the country's economic indicators, such as GDP, WPI, SLR, PPP, PCI, BOP, CRR, OMO, Repo, Reverse Repo, and interest rates. Data was collected from reliable sources, including the World Bank and RBI, covering a 12-year period from 2010 to 2021. The statistical analysis involved correlation and regression using SPSS software. In India, the study finds that Bank Lending Rate, Cash Reserve Ratio, Statutory Liquidity Ratio, Repo Rate, and Reverse Repo Rate exhibit negative correlations with GDP, PPP, WPI, PCI, and BOP. Conversely, Open Market Operations in India show positive correlations with these economic indicators. In the United States, Bank Lending Rate is positively correlated with GDP, PPP, WPI, and PCI, but negatively correlated with BOP. The Discount rate in the US shows negative correlations with GDP, PPP, WPI, and PCI but positive correlation with BOP. Open Market Operations in the US exhibit positive correlations with GDP, PPP, WPI, and PCI but negative correlation with BOP. Finally, the Reserve Ratio Requirement in the US is negatively correlated with GDP, PPP, WPI, and PCI but positively correlated with BOP. The study's findings offer valuable insights into the connections between monetary policy tools and economic indicators in both countries. These insights can aid policymakers and economists in understanding the effects of policy decisions on their respective economies.