Is Inflation in India an Attractor of Inflation in Nepal?

Edimon Ginting

No 2007/269, IMF Working Papers from International Monetary Fund

Abstract: The paper attempts to answer some important questions around the inflationary process in Nepal, particularly the transmission of inflation from India. Because the Nepali currency is pegged to the Indian rupee and the two countries share an open border, price developments in Nepal would be expected to mirror to those in India. The results show that inflation in India and inflation in Nepal tend to converge in the long run. Our estimates indicate that the passthrough of inflation from India to Nepal takes about seven months. The paper draws some implications for the conduct of monetary policy in Nepal.

Keywords: WP; core inflation measure (search for similar items in EconPapers)
Pages: 30
Date: 2007-11-01
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Citations: View citations in EconPapers (9)

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