Is India ready for flexible Inflation-targeting?

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dc.contributor.author Sen Gupta, Abhijit
dc.contributor.author Sengupta, Rajeswari
dc.date.accessioned 2015-08-14T10:12:48Z
dc.date.available 2015-08-14T10:12:48Z
dc.date.issued 2014-06
dc.identifier.uri http://hdl.handle.net/2275/319
dc.description.abstract In this paper we analyze whether the current macroeconomic environment in India is suitable for implementation of inflation targeting as a monetary policy strategy, in light of the recommendation of the Urjit Patel Committee Report. Our results indicate that historically the Reserve Bank of India has given more importance to inflation compared to output growth and exchange rate changes in its monetary policy conduct and that in recent times there has been an increased emphasis on monetary independence thereby comfortably placing the RBI on a path to move towards flexible inflation targeting. However we also find factors, which are traditionally outside the control of monetary policy do exert a strong impact on aggregate prices in India thereby making the choice of nominal anchor a tricky one. Furthermore, the success of monetary policy in containing inflation is found to be crucially contingent on an appropriate fiscal policy as well. en_US
dc.language.iso en en_US
dc.relation.ispartofseries WP;WP-2014-019
dc.subject Reserve Bank of India en_US
dc.subject Monetary Policy en_US
dc.subject Taylor Rule en_US
dc.subject Financial trilemma en_US
dc.subject Inflation en_US
dc.subject Nominal anchor en_US
dc.subject Fiscal deficit en_US
dc.title Is India ready for flexible Inflation-targeting? en_US
dc.type Working Paper en_US

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