{
  "title": "Nepal: Selected Issues",
  "publication": "IMF Staff Country Reports, February 17, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/02/15/nepal-selected-issues-46623",
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  "summary": "This Selected Issues paper examines the degree to which inflation co-moves between India and a panel of countries in Asia. The paper shows that the considerable co-movement in headline inflation rates between India and Nepal is driven almost exclusively by food-inflation co-movement.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The paper examines the degree to which inflation co-moves between India and a panel of countries in Asia.\n- Considerable co-movement in headline inflation rates between India and Nepal is driven almost exclusively by food-inflation co-movement.\n- The role for inflation spillovers emanating from India in driving non-food inflation in Nepal appears limited.\n- Food inflation co-movement between India and other countries is higher where the co-movement in rainfall deviations from seasonal norms is highest.\n- Core inflation co-movement is weak; idiosyncratic domestic factors such as economic slack, exchange-rate movements, and differing degrees of passthrough from food- and energy-price shocks play an important role."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Nepal should rely on domestic monetary policy rather than stable inflation in India to achieve stable domestic inflation.\n- Domestic monetary policy is primarily effective only in controlling core inflation.\n- Domestic monetary policy needs to be calibrated to domestic inflationary pressures—Nepal cannot necessarily rely on stable inflation in India to achieve stable domestic inflation."
    },
    {
      "heading": "Subject coverage and keywords",
      "content": "- Subject: Financial inclusion, Financial markets, Fiscal federalism, Fiscal policy, Inflation, Prices, Public financial management (PFM)\n- Keywords: Asia and Pacific, CR, Financial inclusion, Fiscal federalism, Global, government initiative, headline inflation inflation rate, India-Nepal case, Inflation, ISCR, Nepal, policy effort, SME credit guarantee scheme, SME lending, South Asia\n\n---\n\n Content in this bundle\n\n- Nepal: Selected Issues; IMF Country Report No. 19/61; January 24, 2019\n  - Nepal: Selected Issues; IMF Country Report No. 19/61; January 24, 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Nepal: Selected Issues; IMF Country Report No. 19/61; January 24, 2019 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: February 17, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781484399781.002",
    "The paper examines the degree to which inflation co-moves between India and a panel of countries in Asia.",
    "Considerable co-movement in headline inflation rates between India and Nepal is driven almost exclusively by food-inflation co-movement.",
    "The role for inflation spillovers emanating from India in driving non-food inflation in Nepal appears limited.",
    "Food inflation co-movement between India and other countries is higher where the co-movement in rainfall deviations from seasonal norms is highest.",
    "Core inflation co-movement is weak; idiosyncratic domestic factors such as economic slack, exchange-rate movements, and differing degrees of passthrough from food- and energy-price shocks play an important role.",
    "Nepal should rely on domestic monetary policy rather than stable inflation in India to achieve stable domestic inflation.",
    "Domestic monetary policy is primarily effective only in controlling core inflation.",
    "Domestic monetary policy needs to be calibrated to domestic inflationary pressures—Nepal cannot necessarily rely on stable inflation in India to achieve stable domestic inflation.",
    "Subject: Financial inclusion, Financial markets, Fiscal federalism, Fiscal policy, Inflation, Prices, Public financial management (PFM)",
    "Keywords: Asia and Pacific, CR, Financial inclusion, Fiscal federalism, Global, government initiative, headline inflation inflation rate, India-Nepal case, Inflation, ISCR, Nepal, policy effort, SME credit guarantee scheme, SME lending, South Asia",
    "**Nepal: Selected Issues; IMF Country Report No. 19/61; January 24, 2019**"
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