Modeling and Forecasting Inflation in India

36 Pages Posted: 15 Feb 2006

See all articles by Tim Callen

Tim Callen

International Monetary Fund (IMF) - Asia and Pacific Department

Dongkoo Chang

affiliation not provided to SSRN

Date Written: September 1999

Abstract

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.

Keywords: India inflation cointegration

JEL Classification: C51 E31

Suggested Citation

Callen, Tim and Chang, Dongkoo, Modeling and Forecasting Inflation in India (September 1999). IMF Working Paper No. 99/119, Available at SSRN: https://ssrn.com/abstract=880646

Tim Callen (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Dongkoo Chang

affiliation not provided to SSRN

No Address Available

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