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Does Monetary Policy Stabilise Food Inflation in India? Evidence From Quantile Regression Analysis

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  • Asharani Samal
  • Phanindra Goyari

Abstract

This study examines the role of monetary policy shocks on food inflation in India, spanning from January 2009 to December 2019. Utilising quantile regression analysis, we find that contractionary monetary policy stabilises food inflation across the quantiles. However, exchange rate and transportation cost play a substantial role in promoting food inflation in lower, middle and all quantiles. Our study also reveals that monetary policy transmission through exchange rate and asset price channels increases food inflation across all quantiles. In contrast, bank credit and interest rate channels reduce it in lower and median quantiles, that is, at lower rates of inflation.

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  • Asharani Samal & Phanindra Goyari, 2022. "Does Monetary Policy Stabilise Food Inflation in India? Evidence From Quantile Regression Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(3), pages 361-372, September.
    • Handle: RePEc:bla:ausecr:v:55:y:2022:i:3:p:361-372
    DOI: 10.1111/1467-8462.12474
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