Modeling India's External Sector: Review and Some Empirics.

In the aftermath of global food fuel price spikes and the recent global financial crisis, understanding of external sector behaviour has become crucial. More specifically, the transmission mechanism of external sector shocks to domestic macroeconomic variables is essential for undertaking relevant policies to mitigate adverse impact of such shocks. Here an attempt has been made to review the theoretical and empirical issues relating to India's external sector behaviour and present a suitable analytical framework for macro modeling.