Estimating a monetary policy rule for India

Michael Hutchison, Rajeswari Sengupta and Nirvikar Singh

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates whether the seemingly discretionary and flexible approach of the Reserve Bank of India can in practice be described by a Taylor-type rule. It estimates an exchange-rate-augmented Taylor rule for India over the period Quarter 1 of 1980 to Quarter 4 of 2008. It investigates monetary policy changes between the pre- and post-liberalization periods in order to capture the potential impact of macroeconomic structural changes on the RBI's monetary policy conduct. Overall, it finds that the output gap seems to matter more to RBI than inflation, there is greater sensitivity to consumer price inflation, exchange rate changes do not constitute an important policy factor, and the post-1998 conduct of monetary policy seems to have changed in the direction of less inertia.

Keywords: Reserve Bank of India; Monetary Policy; Taylor Rule; Indian Economy (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 (search for similar items in EconPapers)
Date: 2010-09-18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/38924/1/MPRA_paper_38924.pdf original version (application/pdf)

Related works:
Working Paper: Estimating a Monetary Policy Rule for India (2010)
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:38924

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 ().