Monetary Policy in India: Objectives, Reaction Function and Policy Effectiveness
AbstractIn the first part of this paper, the policy reaction functions of the Reserve Bank of India (RBI) have been modeled to see how policy stance decisions respond to the changes in the goal variables. In the second part, the transmission effects of RBIâ€™s policy stances on the goal variables have been analyzed using the Granger causality test, and analysis of simple estimated models of relevant variables. It may be suggested from the results that the RBI should not be working simultaneously with instruments of quantity and price control and should shelve the cash reserve ratio (CRR) and concentrate more on price variables for conducting monetary policy.
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Bibliographic InfoArticle provided by Review of Applied Economics in its journal Review of Applied Economics.
Volume (Year): 2 (2006)
Issue (Month): 2 ()
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monetary policy; granger block non-causality; India; Financial Economics; C2; E4; E5;
Find related papers by JEL classification:
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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