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What lowered inflation in India: monetary policy or commodity prices?

Author

Listed:
  • Pulapre Balakrishnan

    (Ashoka University
    IIM Kozhikode)

  • M. Parameswaran

    (Centre for Development Studies)

Abstract

India has seen lower inflation by historical standards for the past 6 years. This has been attributed to the adoption of inflation targeting by the central bank, the Reserve Bank of India in 2016. In particular, it has been asserted that the lower inflation reflects the anchoring of expectations. We evaluate these claims. An econometric investigation indicates that there is no basis to the claim that inflation has been lowered due to the anchoring of expectations. On the other hand, we are able to account for the trajectory of inflation in India after 2016 in terms of an alternative explanation of inflation, namely the structuralist.

Suggested Citation

  • Pulapre Balakrishnan & M. Parameswaran, 2022. "What lowered inflation in India: monetary policy or commodity prices?," Indian Economic Review, Springer, vol. 57(1), pages 97-111, June.
    • Handle: RePEc:spr:inecre:v:57:y:2022:i:1:d:10.1007_s41775-022-00134-z
    DOI: 10.1007/s41775-022-00134-z
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    References listed on IDEAS

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    More about this item

    Keywords

    Inflation targeting; Inflation models; Monetary policy; India; Structuralist macroeconomics;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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