Is the oil price pass-through in India any different?

Kumarjit Mandal, Indranil Bhattacharyya and Binod B. Bhoi

Journal of Policy Modeling, 2012, vol. 34, issue 6, 832-848

Abstract: In the wake of deregulation of prices of some petroleum products, we estimate the pass-through impact of international oil prices on the Indian economy. In contrast to global trends, we find evidence of higher pass-through to domestic inflation and industrial output, particularly since 2002 when domestic prices started to adjust more frequently to international oil prices. We also simulate to obtain the potential full pass-through impact if prices were completely deregulated and find that such a pricing strategy could result in significant upsurge of inflation with consequential effect on output. On the other hand, staggered adjustments would deteriorate government finances.

Keywords: Oil price shock; Pass-through; Inflation; Phillips curve; Generalised VAR (search for similar items in EconPapers)
JEL-codes: E17 E23 E52 F43 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:34:y:2012:i:6:p:832-848

DOI: 10.1016/j.jpolmod.2012.06.001

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