Kishor, N. Kundan (2009): Modeling Inflation in India: The Role of Money.
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This paper studies the role of the real money gap- the deviation of real money balance from its long-run equilibrium level- for predicting inflation in India. Using quarterly data on manufacturing inflation from 1982 to 2007, we find that the real money gap is a significant predictor of inflation in India. Our results show that this variable is a better predictor of future inflation at quarterly horizon than the deviation of broad money growth from its target for the whole sample period. We also document a break in the overall predictability of inflation in the last quarter of 1995. We find that except for the real money gap, the forecasting power of other predictors under study has declined considerably after 1995.
|Item Type:||MPRA Paper|
|Original Title:||Modeling Inflation in India: The Role of Money|
|English Title:||Modeling Inflation in India: The Role of Money|
|Keywords:||Inflation. Monetary Policy, Indian Economy|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
|Depositing User:||N Kundan Kishor|
|Date Deposited:||07. Jul 2009 18:09|
|Last Modified:||15. Dec 2013 13:43|
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