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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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:
Uncontrolled Keywords: Fiscal Transfers; Welfare programs; Government spending; Inflation
Subjects: Social sciences > Economics
Divisions: Azim Premji University > University Publications > Working Paper
Full Text Status: Public
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