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Revisiting the empirical existence of the Phillips curve for India

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  • Singh, B. Karan
  • Kanakaraj, A.
  • Sridevi, T.O.

Abstract

This paper revisits the empirical existence of the Phillips curve in the Indian context. To estimate the Phillips curve we need two variables: inflation and the output gap. In the case of India, incorrect measurement of both variables causes much difficulty in estimating the Phillips curve. We use a non-linear Kalman filter approach to estimate the output gap and find that the Kalman filter estimate captures all the dynamics of the economy. Our results show that after taking supply shocks into consideration, there is clear evidence as to the existence of the Phillips curve in India for recent years.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 22 (2011)
Issue (Month): 3 (June)
Pages: 247-258

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Handle: RePEc:eee:asieco:v:22:y:2011:i:3:p:247-258

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Keywords: Kalman filter Output gap Inflation;

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Cited by:
  1. Kapur, Muneesh, 2013. "Revisiting the Phillips curve for India and inflation forecasting," Journal of Asian Economics, Elsevier, Elsevier, vol. 25(C), pages 17-27.
  2. Jagadish Prasad Sahu, 2013. "Inflation dynamics in India: A hybrid New Keynesian Phillips Curve approach," Economics Bulletin, AccessEcon, vol. 33(4), pages 2634-2647.

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