India and the global financial crisis

by Robert J Shiller
Professor of Economics and Professor of Finance at Yale University

A year ago, people were questioning if the subprime crisis that began in the summer of 2007 in the United States would spread to India. It was pointed out that India has not been a major investor in US subprime mortgages, and that the institutions of subprime lending, of piggy-back mortgages, of no-doc mortgages and of securitisation of mortgages are not prominent in India.

Moreover, the Reserve Bank of India did not follow the policy of the Federal Reserve in the US of cutting interest rates to near zero levels at the height of a real estate boom.

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