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Relationship between inflation and relative price variability in India

Manjusha Senapati and Pushpa Trivedi

Macroeconomics and Finance in Emerging Market Economies, 2018, vol. 11, issue 2, 107-123

Abstract: The paper attempts to investigate the relationship between relative price variability (RPV) and aggregate inflation rate through parametric and semi-parametric methods (kernel regression method). Monthly data of wholesale price index is used for the period from February 1995 to March 2014 for this purpose. Both the parametric and semi-parametric methods lead us to the non-monotonic relationship between RPV and inflation. An attempt has also been made to determine the optimal inflation rate that would minimize RPV.

Date: 2018
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DOI: 10.1080/17520843.2017.1296879

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