IDEAS home Printed from https://ideas.repec.org/p/ess/wpaper/id7100.html
   My bibliography  Save this paper

Inflation Targeting for India? The Implications of Limited Asset Market Participation

Author

Listed:
  • Tara Iyer

Abstract

This paper considers the implications of an imperfect monetary transmission mechanism for optimal monetary policy choices in an open economy. The asset market channel is restricted in this paper as some agents lack financial capacity and cannot participate in asset markets. We find that while consumer price index (CPI) inflation targeting is appropriate upon a cost-push shock when all agents can borrow and save, there exists a case for stabilizing the nominal exchange rate when financial participation is low. The analysis is applied to the Indian context where monetary policy has recently been overhauled and a new CPI ininflation targeting regime is being implemented.

Suggested Citation

  • Tara Iyer, 2015. "Inflation Targeting for India? The Implications of Limited Asset Market Participation," Working Papers id:7100, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:7100
    Note: Institutional Papers
    as

    Download full text from publisher

    File URL: http://www.esocialsciences.org/Download/repecDownload.aspx?fname=A201579123953_39.pdf&fcategory=Articles&AId=7100&fref=repec
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. de Ferra, Sergio & Mitman, Kurt & Romei, Federica, 2020. "Household heterogeneity and the transmission of foreign shocks," Journal of International Economics, Elsevier, vol. 124(C).
    2. Oskolkov, Aleksei, 2023. "Exchange rate policy and heterogeneity in small open economies," Journal of International Economics, Elsevier, vol. 142(C).

    More about this item

    Keywords

    Open Economy Macroeconomics; General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Optimal Monetary Policy; Limited Asset Market Participation;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    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:ess:wpaper:id:7100. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Padma Prakash (email available below). General contact details of provider: http://www.esocialsciences.org .

    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.