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Author/Editor:
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Patra, Michael Debabrata ; Kapur, Muneesh
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Publication Date:
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May 01, 2012
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Electronic Access:
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Free Full text
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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
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Summary:
This paper empirically evaluates the operational performance of the McCallum rule, the Taylor rule and hybrid rules in India over the period 1996-2011 using quarterly data, with a view to analytically informing the conduct of monetary policy. The results show that forward-looking formulations of both rules and their hybrid version - setting a nominal output growth objective for monetary policy with an interest rate instrument - outperform contemporaneous and backward-looking specifications, especially when targeting core components of GDP and inflation, and combine the best parts of efficiency and discretion.
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Order a print copy
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Series:
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Working Paper No. 12/118
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Subject(s):
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Central banks | Monetary authorities | Monetary operations | India
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Author's Keyword(s):
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India | McCallum Rule | Monetary Policy | Monetary Policy Reaction Function | Neutral Interest Rate | Taylor Rule |
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