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Inflation and Inflation Uncertainty in India, 1957 - 2005

Author

Listed:
  • John Thornton

    (International Monetary Fund, Washington DC, USA)

Abstract

This note, employing a GARCH model, finds a positive and significant relationship between the level and variability of monthly inflation in India in the period 1957-2005, with causation running from inflation to uncertainty about future inflation, as hypothesized by Friedman. To the extent that inflation uncertainty has negative output effects, this strengthens the case for the central bank to focus on price stability as one of the prime objectives of monetary policy.

Suggested Citation

  • John Thornton, 2006. "Inflation and Inflation Uncertainty in India, 1957 - 2005," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 41(1), pages 1-8, July.
    • Handle: RePEc:dse:indecr:v:41:y:2006:i:1:p:1-8
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    Citations

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    Cited by:

    1. Akhand Akhtar Hossain, 2014. "Inflation and Inflation Volatility in Australia," Economic Papers, The Economic Society of Australia, vol. 33(2), pages 163-185, June.
    2. Akhand Akhtar Hossain & Popkarn Arwatchanakarn, 2016. "Inflation and inflation volatility in Thailand," Applied Economics, Taylor & Francis Journals, vol. 48(30), pages 2792-2806, June.
    3. Yadavindu Ajit & Taniya Ghosh, 2024. "A Historical perspective on India's inflation persistence: A Quantile analysis," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2024-015, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Kushal Banik Chowdhury & Kaustav Kanti Sarkar & Srikanta Kundu, 2021. "Nonlinear relationships between inflation, output growth and uncertainty in India: New evidence from a bivariate threshold model," Bulletin of Economic Research, Wiley Blackwell, vol. 73(3), pages 469-493, July.

    More about this item

    Keywords

    Inflation; inflation uncertainty; conditional variance;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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