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Revisiting the empirical existence of the Phillips curve for India

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  • Singh, B. Karan
  • Kanakaraj, A.
  • Sridevi, T.O.

Abstract

This paper revisits the empirical existence of the Phillips curve in the Indian context. To estimate the Phillips curve we need two variables: inflation and the output gap. In the case of India, incorrect measurement of both variables causes much difficulty in estimating the Phillips curve. We use a non-linear Kalman filter approach to estimate the output gap and find that the Kalman filter estimate captures all the dynamics of the economy. Our results show that after taking supply shocks into consideration, there is clear evidence as to the existence of the Phillips curve in India for recent years.

Suggested Citation

  • Singh, B. Karan & Kanakaraj, A. & Sridevi, T.O., 2011. "Revisiting the empirical existence of the Phillips curve for India," Journal of Asian Economics, Elsevier, vol. 22(3), pages 247-258, June.
  • Handle: RePEc:eee:asieco:v:22:y:2011:i:3:p:247-258
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    Citations

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    Cited by:

    1. Kapur, Muneesh & Behera, Harendra, 2012. "Monetary Transmission Mechanism in India: A Quarterly Model," MPRA Paper 70631, University Library of Munich, Germany.
    2. Jagadish Prasad Sahu, 2013. "Inflation dynamics in India: A hybrid New Keynesian Phillips Curve approach," Economics Bulletin, AccessEcon, vol. 33(4), pages 2634-2647.
    3. Kapur, Muneesh, 2013. "Revisiting the Phillips curve for India and inflation forecasting," Journal of Asian Economics, Elsevier, pages 17-27.
    4. Biswajit Maitra, 2016. "Inflation Dynamics in India: Relative Role of Structural and Monetary Factors," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 237-255, December.
    5. Goyal, Ashima & Tripathi, Shruti, 2015. "Separating shocks from cyclicality in Indian aggregate supply," Journal of Asian Economics, Elsevier, pages 93-103.
    6. Harendra Behera & Garima Wahi & Muneesh Kapur, 2017. "Phillips Curve Relationship in India: Evidence from State-Level Analysis," Working Papers id:11973, eSocialSciences.
    7. Sudha Narayanan & Sowmya Dhanraj, 2013. "Child work and schooling in rural north India: What do time use data say about tradeoffs and drivers of human capital investment?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-023, Indira Gandhi Institute of Development Research, Mumbai, India.
    8. Dolly Singh & Nmp Verma, 2016. "Tradeoff between Inflation and Unemployment in the Short Run: A Case of the Indian Economy," International Finance and Banking, Macrothink Institute, vol. 3(1), pages 77-96, June.
    9. Holtemöller, Oliver & Mallick, Sushanta, 2016. "Global food prices and monetary policy in an emerging market economy: The case of India," Journal of Asian Economics, Elsevier, pages 56-70.
    10. Sunil Paul & Sartaj Rasool Rather & M. Ramachandran, 2015. "Money and Inflation: Evidence from P-Star Model," Working Papers 2015-115, Madras School of Economics,Chennai,India.
    11. Ashima Goyal & Shruti Tripathi, 2015. "Separating Shocks from Cyclicality in Indian Aggregate Supply," Working Papers id:6673, eSocialSciences.
    12. Goyal, Ashima & Tripathi, Shruti, 2015. "Separating shocks from cyclicality in Indian aggregate supply," Journal of Asian Economics, Elsevier, pages 93-103.

    More about this item

    Keywords

    Kalman filter Output gap Inflation;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • A21 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Pre-college

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