Impact of Imported Intermediate Goods on Inflation Dynamics: Evidence from India

Khnd. Md. Mostafa Kamal
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Khnd. Md. Mostafa Kamal: Assistant Professor, Department of Statistics,, Postal: University of Dhaka, Bangladesh.

Bangladesh Development Studies, 2014, vol. 37, issue 04, 53-63

Abstract: India is a highly open economy having large amount of trade with the rest of the world. This paper examines the role of imported intermediate goods on Indian inflation behaviour by estimating open economy version of Phillips curve model using quarterly data over the period of 1990 to 2013. The results obtained by applying GMM estimation show that imported intermediate goods play an important role in inflation dynamics via both real marginal cost and exchange rate pass-through. The results are valid when GDP deflator as well as CPI inflation is used as inflation measure.

Keywords: GMM Estimation; Imported Intermediate Goods; Inflation Dynamics; Open Economy; Phillips Curve (search for similar items in EconPapers)
JEL-codes: C51 E52 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ris:badest:0581

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