A Monetary Policy Model Without Money for India

WPIEA2010183 Image
Price:  $18.00

Author/Editor: Michael Patra, Muneesh Kapur
Release Date: © August, 2010
ISBN : 978-1-45520-217-1
Stock #: WPIEA2010183
Stock Status: On back-order

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A New Keynesian model estimated for India yields valuable insights. Aggregate demand reacts to interest rate changes with a lag of at least three quarters, with inflation taking seven quarters to respond. Inflation is inertial and persistent when it sets in, irrespective of the source. Exchange rate pass-through to domestic inflation is low. Inflation turns out to be the dominant focus of monetary policy, accompanied by a strong commitment to the stabilization of output. Recent policy actions have raised the effective policy rate, but the estimated neutral policy rate suggests some further tightening to normalize the policy stance.


Economic policy , Monetary policy

More publications in this series: Working Papers

More publications by: Michael Patra ; Muneesh Kapur