Inflation Expectations and Monetary Policy in India
AbstractThis paper pursues a computationally intensive approach to generate future inflation, followed by an exploration of the determinants of inflation expectations by estimating a new Keynesian type Phillips curve that takes into account country-specific characteristics, the stance of monetary and fiscal policies, marginal costs and exogenous supply shocks. The empirical results indicate that high and climbing inflation could easily seep into peopleâ€™s anticipation of future inflation and linger. There is a reputational bonus for monetary policy to act against inflation now rather than going for cold turkey when societal compulsions reach a critical mass.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/84.
Date of creation: 01 Apr 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-CBA-2010-05-02 (Central Banking)
- NEP-CWA-2010-05-02 (Central & Western Asia)
- NEP-MAC-2010-05-02 (Macroeconomics)
- NEP-MON-2010-05-02 (Monetary Economics)
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