Is the oil price pass-through in India any different?
Abstract
In the wake of deregulation of prices of some petroleum products, we estimate the pass-through impact of international oil prices on the Indian economy. In contrast to global trends, we find evidence of higher pass-through to domestic inflation and industrial output, particularly since 2002 when domestic prices started to adjust more frequently to international oil prices. We also simulate to obtain the potential full pass-through impact if prices were completely deregulated and find that such a pricing strategy could result in significant upsurge of inflation with consequential effect on output. On the other hand, staggered adjustments would deteriorate government finances.Download Info
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Bibliographic Info
Article provided by Elsevier in its journal Journal of Policy Modeling.
Volume (Year): 34 (2012)
Issue (Month): 6 ()
Pages: 832-848
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Web page: http://www.elsevier.com/locate/inca/505735
Related research
Keywords: Oil price shock; Pass-through; Inflation; Phillips curve; Generalised VAR;Find related papers by JEL classification:
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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