Modeling and Forecasting Inflation in India

Author/Editor:

Tim Callen ; Dongkoo Chang

Publication Date:

September 1, 1999

Electronic Access:

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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

Summary:

The Reserve Bank of India (RBI) has moved away from a broad money target toward a “multiple indicators” approach to the conduct of monetary policy. In adopting such a framework, it is necessary to know which of the many potential indicators provide the most reliable and timely information on future developments in the target variable(s). This paper assesses which indicators provide the most useful information about future inflationary trends. It concludes that while the broad money target has been de-emphasized, developments in the monetary aggregates remain an important indicator of future inflation. The exchange rate and import prices are also relevant, particularly for inflation in the manufacturing sector.

Series:

Working Paper No. 1999/119

Subject:

Consumer price indexes Inflation Monetary base Money Output gap Prices Production Wholesale price indexes

English

Publication Date:

September 1, 1999

ISBN/ISSN:

9781451854152/1018-5941

Stock No:

WPIEA1191999

Pages:

36

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