Is Inflation in India an Attractor of Inflation in Nepal?

Author/Editor:

Edimon Ginting

Publication Date:

November 1, 2007

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper attempts to answer some important questions around the inflationary process in Nepal, particularly the transmission of inflation from India. Because the Nepali currency is pegged to the Indian rupee and the two countries share an open border, price developments in Nepal would be expected to mirror to those in India. The results show that inflation in India and inflation in Nepal tend to converge in the long run. Our estimates indicate that the passthrough of inflation from India to Nepal takes about seven months. The paper draws some implications for the conduct of monetary policy in Nepal.

Series:

Working Paper No. 07/269

Subject:

English

Publication Date:

November 1, 2007

ISBN/ISSN:

9781451868326/1018-5941

Stock No:

WPIEA2007269

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

30

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