IDEAS home Printed from https://ideas.repec.org/p/ash/wpaper/66.html
   My bibliography  Save this paper

What lowered inflation in India: Monetary policy or commodity prices?

Author

Listed:
  • Pulapre Balakrishnan

    (pulapre.balakrishnan@ashoka.edu.in)

  • M Parameswaran

    (Associate Professor, Centre for Development Studies, Thiruvananthapuram)

Abstract

India has seen lower inflation by historical standards, for the past five years. This has been attributed by some observers to the adoption of inflation targeting by the country’s central bank, the Reserve Bank of India. In particular, it has been asserted that the taming of inflation reflects the anchoring of expectations of it through inflation targeting. We evaluate these claims. Our estimates indicate that there is no basis to the claim that inflation has been lowered due to the anchoring of expectations. On the other hand, we are able to fully account for the trajectory of inflation in India in terms of an explanation of inflation other than the one on which inflation targeting is premised.

Suggested Citation

  • Pulapre Balakrishnan & M Parameswaran, 2021. "What lowered inflation in India: Monetary policy or commodity prices?," Working Papers 66, Ashoka University, Department of Economics.
    • Handle: RePEc:ash:wpaper:66
    as

    Download full text from publisher

    File URL: https://dp.ashoka.edu.in/ash/wpaper/paper66_0.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    2. Eichengreen, Barry & Gupta, Poonam & Choudhary, Rishabh, 2021. "Inflation Targeting in India: An Interim Assessment," India Policy Forum, National Council of Applied Economic Research, vol. 17(1), pages 77-141.
    3. Balakrishnan, Pulapre, 1994. "How best to model inflation in India," Journal of Policy Modeling, Elsevier, vol. 16(6), pages 677-683, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pulapre Balakrishnan & M. Parameswaran, 2022. "What lowered inflation in India: monetary policy or commodity prices?," Indian Economic Review, Springer, vol. 57(1), pages 97-111, June.
    2. Akosah, Nana Kwame & Alagidede, Imhotep Paul & Schaling, Eric, 2020. "Testing for asymmetry in monetary policy rule for small-open developing economies: Multiscale Bayesian quantile evidence from Ghana," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    3. Ferreira, Pedro Cavalcanti & Galvao Jr., Antonio F. & Gomes, Fabio Augusto Reis & Pessoa, Samuel de Abreu, 2010. "The effects of external and internal shocks on total factor productivity," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 298-309, August.
    4. Kelly Burns & Imad Moosa, 2017. "Demystifying the Meese–Rogoff puzzle: structural breaks or measures of forecasting accuracy?," Applied Economics, Taylor & Francis Journals, vol. 49(48), pages 4897-4910, October.
    5. Matteo Mogliani, 2010. "Residual-based tests for cointegration and multiple deterministic structural breaks: A Monte Carlo study," Working Papers halshs-00564897, HAL.
    6. J. Cuñado & L. Gil-Alana & F. Gracia, 2009. "US stock market volatility persistence: evidence before and after the burst of the IT bubble," Review of Quantitative Finance and Accounting, Springer, vol. 33(3), pages 233-252, October.
    7. Alaa Abi Morshed & Elena Andreou & Otilia Boldea, 2018. "Structural Break Tests Robust to Regression Misspecification," Econometrics, MDPI, vol. 6(2), pages 1-39, May.
    8. Vincent Dekker & Karsten Schweikert, 2021. "A Comparison of Different Data-driven Procedures to Determine the Bunching Window," Public Finance Review, , vol. 49(2), pages 262-293, March.
    9. Das, Piyali & Ghate, Chetan, 2022. "Debt decomposition and the role of inflation: A security level analysis for India," Economic Modelling, Elsevier, vol. 113(C).
    10. Kar, Sabyasachi & Pritchett, Lant & Raihan, Selim & Sen, Kunal, 2013. "Looking for a break: Identifying transitions in growth regimes," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 151-166.
    11. Giraitis, Liudas & Kapetanios, George & Marcellino, Massimiliano, 2021. "Time-varying instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 224(2), pages 394-415.
    12. Mariam Camarero & Juan Sapena & Cecilio Tamarit, 2020. "Modelling Time-Varying Parameters in Panel Data State-Space Frameworks: An Application to the Feldstein–Horioka Puzzle," Computational Economics, Springer;Society for Computational Economics, vol. 56(1), pages 87-114, June.
    13. Bernard, Jean-Thomas & Idoudi, Nadhem & Khalaf, Lynda & Yelou, Clement, 2007. "Finite sample multivariate structural change tests with application to energy demand models," Journal of Econometrics, Elsevier, vol. 141(2), pages 1219-1244, December.
    14. Moya-Martínez, Pablo & Ferrer-Lapeña, Román & Escribano-Sotos, Francisco, 2014. "Oil price risk in the Spanish stock market: An industry perspective," Economic Modelling, Elsevier, vol. 37(C), pages 280-290.
    15. Ivan Paya & David A. Peel, 2004. "Nonlinear Ppp Under The Gold Standard," Working Papers. Serie AD 2004-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    16. Anne Morrison Piehl & Suzanne J. Cooper & Anthony A. Braga & David M. Kennedy, 2003. "Testing for Structural Breaks in the Evaluation of Programs," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 550-558, August.
    17. Antonia López Villavicencio & Josep Lluís Raymond Bara, 2006. "The short and long-run determinants of the real exchange rate in Mexico," Working Papers wpdea0606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    18. Guglielmo Maria Caporale & Juncal Cuñado & Luis A. Gil-Alana, 2013. "Modelling long-run trends and cycles in financial time series data," Journal of Time Series Analysis, Wiley Blackwell, vol. 34(3), pages 405-421, May.
    19. Garrod Brian & Almeida António & Machado Luiz, 2023. "Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy," European Journal of Tourism, Hospitality and Recreation, Sciendo, vol. 13(2), pages 154-172, December.
    20. Kim, Man-Keun & Tejeda, Hernan A., 2018. "Impact of Alfalfa Exports Surge on Dairy and Feed Markets," 2018 Annual Meeting, August 5-7, Washington, D.C. 273795, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    India;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ash:wpaper:66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ashoka University (email available below). General contact details of provider: https://www.ashoka.edu.in .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.