Inflation Expectations and Monetary Policy in India: An Empirical Exploration
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 people’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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