Food Inflation in India: The Role for Monetary Policy
Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-thr...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
International Monetary Fund
2014
|
| Schriftenreihe: | IMF Working Papers
Working Paper No. 14/178 |
| Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
| Zusammenfassung: | Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-through from headline inflation to core inflation. The results indicate that India's inflation is highly inertial and persistent. Due to second-round effects, the gap between headline inflation and core inflation decreases by about three fourths within one year as core inflation catches up with headline inflation. Large second-round effects stem from several factors, such as the high share of food in household expenditure and the role of food inflation in informing inflation expectations and wage setting. Analysis suggests that in order to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time. In addition, progress on structural reforms to raise potential growth is critical to reduce the burden on monetary policy |
| Beschreibung: | 1 Online-Ressource (23 p) |
| ISBN: | 1484392094 9781484392096 |
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| index_date | 2024-07-03T20:13:35Z |
| indexdate | 2024-07-10T09:35:46Z |
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| spelling | Anand, Rahul Verfasser aut Food Inflation in India The Role for Monetary Policy Anand, Rahul Washington, D.C International Monetary Fund 2014 1 Online-Ressource (23 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 14/178 Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-through from headline inflation to core inflation. The results indicate that India's inflation is highly inertial and persistent. Due to second-round effects, the gap between headline inflation and core inflation decreases by about three fourths within one year as core inflation catches up with headline inflation. Large second-round effects stem from several factors, such as the high share of food in household expenditure and the role of food inflation in informing inflation expectations and wage setting. Analysis suggests that in order to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time. In addition, progress on structural reforms to raise potential growth is critical to reduce the burden on monetary policy Online-Ausg Ding, Ding Sonstige oth Tulin, Volodymyr Sonstige oth http://elibrary.imf.org/view/IMF001/22071-9781484392096/22071-9781484392096/22071-9781484392096.xml Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Anand, Rahul Food Inflation in India The Role for Monetary Policy |
| title | Food Inflation in India The Role for Monetary Policy |
| title_auth | Food Inflation in India The Role for Monetary Policy |
| title_exact_search | Food Inflation in India The Role for Monetary Policy |
| title_exact_search_txtP | Food Inflation in India The Role for Monetary Policy |
| title_full | Food Inflation in India The Role for Monetary Policy Anand, Rahul |
| title_fullStr | Food Inflation in India The Role for Monetary Policy Anand, Rahul |
| title_full_unstemmed | Food Inflation in India The Role for Monetary Policy Anand, Rahul |
| title_short | Food Inflation in India |
| title_sort | food inflation in india the role for monetary policy |
| title_sub | The Role for Monetary Policy |
| url | http://elibrary.imf.org/view/IMF001/22071-9781484392096/22071-9781484392096/22071-9781484392096.xml |
| work_keys_str_mv | AT anandrahul foodinflationinindiatheroleformonetarypolicy AT dingding foodinflationinindiatheroleformonetarypolicy AT tulinvolodymyr foodinflationinindiatheroleformonetarypolicy |