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We examine the relative fortunes of the historically disadvantaged scheduled castes and tribes (SC/ST) in India in terms of their education attainment, occupation choices, consumption and wages. We study the period 1983-2005 using household survey data from successive rounds of the National Sample Survey. We …nd that this period has been characterized by a signi…cant convergence of education, occupation distribution, wages and consumption levels of SC/STs toward non-SC/ST levels. Using various decomposition approaches we …nd that the improvements in education account for a major part of the wage and consumption convergence.JEL Classi…cation: J6, R2

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, the World Bank, and Yale for helpful comments and discussions. We gratefully acknowledge research support provided by grants from the UCLA Academic Senate. We are also indebted to Alejandro Jara for superb research assistance and Bernando Blum for providing us data on Brazil. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

We present a new data fact: in response to a monetary tightening, the nominal exchange tends to appreciate in developed countries but depreciate in developing countries. A model is formalized to rationalize this contrasting pattern. It has three key channels of monetary transmission: a liquidity demand channel, a …scal channel and an output channel. These have o¤setting e¤ects on the exchange rate.The paper shows that a calibrated version of the model can explain the contrast between developed and developing countries. Using counterfactual experiments we identify di¤erences in the liquidity demand e¤ect as being key to the contrasting responses generated by the model. Finally, the paper provides independent evidence of systematic variation between appreciating and depreciating countries in the strength of the liquidity demand e¤ect.JEL Classi…cation: F3, F4