IDEAS home Printed from
   My bibliography  Save this paper

A Re-Examination of the Long-Run Relationship between Money Supply and Inflation in India


  • M Thomas Paul

    (National Institute of Bank Management)

  • N R Bhanumurthy

    (Institute for social and Economic Change)

  • Nishant Bapat


The present study tries to examine the long-run relationship between money supply and prices in the Indian context with the help of both annual data for the period 1953 to 1998 and with the help of monthly data for the period 1993:1 to 1998:12. The present study finds that there still exists a strong influence, though not immediate, of money supply on the price changes in India in the long run. It was also found that money supply is not exogenous and is influenced by prices and output. The results certainly raise doubts about shifting the focus from money supply to interest rates by RBI. The shift to interest rate targeting is not supported by this study. Financial liberalisation has not made income velocity of money unstable in India. Monetary targeting is still useful.

Suggested Citation

  • M Thomas Paul & N R Bhanumurthy & Nishant Bapat, 2001. "A Re-Examination of the Long-Run Relationship between Money Supply and Inflation in India," Working Papers 83, Institute for Social and Economic Change, Bangalore.
  • Handle: RePEc:sch:wpaper:83

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Money Supply; Inflation Rate;


    Access and download statistics


    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:sch:wpaper:83. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (B B Chand). General contact details of provider: .

    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 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.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.