Inflation expectations of households: do they influence wage-price dynamics in India?

Sitikantha Pattanaik, Silu Muduli and Soumyajit Ray

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the usefulness of survey-based measures of inflation expectations to predict inflation using hybrid versions of New Keynesian Phillips Curve (NKPC). While both 3 months ahead and 1-year ahead inflation expectations of households emerge statistically significant in explaining and predicting inflation in India, effectively they work as substitutes of backward looking expectations given that household expectations are found to be largely adaptive. Unlike in other countries, this paper does not find much evidence on flattening of the Phillips curve. Also, no robust evidence is found on expectations induced wage pressures influen-cing CPI inflation.

Keywords: Inflation expectations; Phillips curve; wage-pricedynamics (search for similar items in EconPapers)
JEL-codes: E24 E31 E52 P24 (search for similar items in EconPapers)
Date: 2020-02-06
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

Published in Macroeconomics and Finance in Emerging Market Economies 3.13(2020): pp. 244-263

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:103685

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