A basic two-sector new Keynesian DSGE model of the Indian economy

Anshul Kumar

MPRA Paper from University Library of Munich, Germany

Abstract: Indian economy is going through underlying changes in post-pandemic recovery process. Effect of policies, monetary or fiscal, on macroeconomy needs a thorough analysis in these recessionary times. In this context, this study develops a closed-economy DSGE model to see the impact of monetary policy on the Indian economy. The model includes price rigidities, and parameters are calibrated using the data on the Indian economy. The model includes two sectors - production and consumption, and an inflation-targeting regime following the Taylor rule. The model is simulated for a positive productivity shock and an expansionary monetary policy shock. Results show that a positive productivity shock improves economic activity, and an expansionary monetary policy shock increases output for the short term only.

Keywords: DSGE models; New-Keynesian; monetary policy; general equilibrium; Indian economy; calibration (search for similar items in EconPapers)
JEL-codes: C32 E32 E37 E5 E52 (search for similar items in EconPapers)
Date: 2023-01-02
New Economics Papers: this item is included in nep-cba and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/115863/1/MPRA_paper_115863.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:115863

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().