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Inflation, Macroeconomic Policy and Hunger: A Variation on a Theme by C. Rangarajan

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  • Raghbendra Jha

Abstract

This paper re-emphasizes the importance of price stability as a tool for macroeconomic policy and make it more specific by considering a typically (unanticipated) advantage of stabilizing the Consumer Price Index (CPI). I briefly review the recent economic growth performance of the Indian economy and recount the sluggish response of poverty to high economic growth. Further, hunger (calorie deficiency) has actually increased during the post-reform period. Using household level National Sample Survey (NSS) data for 1993–94 and 2004–05 the paper shows that calorie intakes in both rural and urban areas are sensitive to commodity (in particular foodgrain) prices. Hence, reducing consumer price inflation is likely to yield a rich dividend by reducing hunger. Indeed rising per capita incomes are not likely to be sufficient to reduce hunger. The paper also reviews some policy challenges to stabilizing consumer prices.

Suggested Citation

  • Raghbendra Jha, 2010. "Inflation, Macroeconomic Policy and Hunger: A Variation on a Theme by C. Rangarajan," ASARC Working Papers 2010-22, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2010-22
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    File URL: https://crawford.anu.edu.au/acde/asarc/pdf/papers/2010/WP2010_22.pdf
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    More about this item

    Keywords

    Inflation targeting; Consumer Price Index; Hunger; Development Policy; India;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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