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Modeling and Forecasting Inflation in India
Author:
Mr. Tim Callen
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and
Dongkoo Chang null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1999: Issue 119
Language:
English
Publication Date:
01 Sep 1999
DOI:
https://doi.org/10.5089/9781451854152.001
ISBN:
9781451854152
ISSN:
1018-5941
Pages:
36
Keywords:
WP; excess demand; WPI inflation; India; inflation; cointegration; inflation development; price inflation; output gap model; inflation expectation; product inflation; Output gap; Wholesale price indexes; Consumer price indexes; Monetary base; Asia and Pacific
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund