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Impact of Imported Intermediate Goods on Inflation Dynamics: Evidence from India

Author

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  • Kamal, Khnd. Md. Mostafa

    (Assistant Professor, Department of Statistics,)

Abstract

India is a highly open economy having large amount of trade with the rest of the world. This paper examines the role of imported intermediate goods on Indian inflation behaviour by estimating open economy version of Phillips curve model using quarterly data over the period of 1990 to 2013. The results obtained by applying GMM estimation show that imported intermediate goods play an important role in inflation dynamics via both real marginal cost and exchange rate pass-through. The results are valid when GDP deflator as well as CPI inflation is used as inflation measure.

Suggested Citation

  • Kamal, Khnd. Md. Mostafa, 2014. "Impact of Imported Intermediate Goods on Inflation Dynamics: Evidence from India," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 37(04), pages 53-63, December.
    • Handle: RePEc:ris:badest:0581
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    GMM Estimation; Imported Intermediate Goods; Inflation Dynamics; Open Economy; Phillips Curve;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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