Fiscal Transfers and Inflaton: Evidence from India

Bahal, Girish and Shrivastava, Anand (2019) Fiscal Transfers and Inflaton: Evidence from India. Working Paper. Azim Premji University,, Bengaluru.

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Abstract

Controlling for monetary policy, government transfers are potentially inflationary. This, however, may not be true when the economy is demandconstrained. Using a panel data of 17 Indian states over 30 years, we show that government transfers via welfare programs do not lead to inflation. For identification, we use a narrative shock series of transfer spending that is based on the introduction of new welfare programs. We then look at a specific program, NREGA, which has been shown to increase rural wages, and show that its implementation did not increase inflation.

Item Type:	Monograph (Working Paper)
Authors:	Bahal, Girish and Shrivastava, Anand
Document Language:	Language English
Uncontrolled Keywords:	Fiscal Transfers; Welfare programs; Government spending; Inflation
Subjects:	Social sciences > Economics
Divisions:	Azim Premji University - Bengaluru > Research Centre > Centre for Sustainable Employment
Full Text Status:	Public
URI:	http://publications.azimpremjiuniversity.edu.in/id/eprint/4305
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