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How Persistent is Indian Inflationary Process, Has it Changed?

Khundrakpam, Jeevan K. (2008): How Persistent is Indian Inflationary Process, Has it Changed? Published in: Reserve Bank of India Occasional Papers , Vol. 29, No. No.2, Monsoon 2008 (March 2009): pp. 24-45.


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Using monthly data for the period 1982:4 to 2008:3, the study analyses the inflation persistence in India in terms of autoregressive properties and lag response of inflation to systematic monetary policy. It finds inflation persistence to be on the lower side,particularly when allowed for the break in the mean of inflation observed around the second half of the 1990s. In general, with the decline in mean rate of inflation, persistence in most of the inflation measures also declined. The impact of money supply on various measures of inflation is mostly positive and had its maximum impact with a much longer lag during the higher inflationary period before the mid-1990s than during the succeeding lower inflationary environment. Interest rate have a negative impact on all the inflation series and, in general, had its maximum impact on inflation with a much longer lag than that of change in money supply.

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