Examining the trade-off between price and financial stability in India

Ila Patnaik, Shalini Mittal () and Radhika Pandey
Additional contact information
Shalini Mittal: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: In recent years, many emerging economies including India have adopted inflation targeting framework. Post the global financial crisis, there is a growing debate on whether monetary policy should target financial stability. Using India as a case study, we present an empirical approach to assess whether monetary policy can target financial stability. This is done by examining the trade-off between price and financial stability for India. Using correlation between price and financial cycles, we find that a trade-off exists between price and financial stability. Our finding is robust to a series of robustness checks. Our study has implications for the conduct of monetary policy in emerging economies. Presence of a trade-off may constrain the ability of a central bank in emerging economies to target financial stability with monetary policy instrument.

Pages: 30
Date: 2019-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: Working Paper 248, 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.nipfp.org.in/media/medialibrary/2019/01/WP_248_3QaIR8x.pdf (application/pdf)

Related works:
Working Paper: Examining the Trade-Off Between Price and Financial Stability in India (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:19/248

Access Statistics for this paper

More papers in Working Papers from National Institute of Public Finance and Policy
Bibliographic data for series maintained by S.Siva Chidambaram ( this e-mail address is bad, please contact ).