Monetary policy in the midst of cost-push inflation

Dasgupta, Zico and Chowdhury, Indranil (2023) Monetary policy in the midst of cost-push inflation. Economic and Political Weekly, 58 (22). pp. 42-50. ISSN 2349-8846

Text - Published Version Restricted to Registered users only Download (1MB) | Request a copy

Abstract

The Reserve Bank of India adopted inflation-targeting monetary policy based on the New Keynesian 3-equation model. How realistic are the assumptions, and how effective have monetary policy instruments been in controlling the inflation rate? Given India’s structural specificities, what are the implications of cost-push inflation for policy rate and output gap? This paper addresses these questions by identifying alternative theoretical possibilities within a simple 3-equation model and locating the Indian specificity by estimating the Phillips curve and monetary policy rule equation. The analysis points towards the constraints of monetary policy in India due to presence of a flat Phillips curve and indicates the possibility of adverse effect on output gap due to presence of Taylor’s rule.

Item Type:	Article
Authors:	Dasgupta, Zico and Chowdhury, Indranil
Document Language:	Language English
Subjects:	Social sciences > Economics > Financial economics > Banks Social sciences > Economics > Production > Economic policy, economic development, economic growth Social sciences > Economics > Macroeconomics & related topics
Divisions:	Azim Premji University - Bengaluru > School of Arts and Sciences
Full Text Status:	Restricted
URI:	http://publications.azimpremjiuniversity.edu.in/id/eprint/6828
Publisher URL:	https://epwrf.in/sameekshatrust.aspx

Actions (login required)

View Item