Modeling Inflation in India – An Error Correction Approach
نویسنده
چکیده
The Structuralist Approach: According to this view, inflation is seen to arise out of structural impediments to the expansion of production in certain crucial sectors of a developing economy. An increase in investment is expected to lead to an increase in demand of consumer goods. This increase in demand for consumer goods leads to an increase in prices, given inelastic supply. Prices rise to a level at which demand for consumption goods is equated with the available supplies. This leads to a decline in real wages. Workers respond to this by demanding higher wages and leading to a wage price spiral.
منابع مشابه
Introduction and Estimation of Monetary Conditions Index for Iran's Economy Using Johansson-Josilius Error Correction Method
Determining the monetary policy rule and identifying expansionary and contractionary policies is of particular importance to monetary policymakers. Monetary conditions index as an average weight of effective money transfer channels can play an important role in identifying expansionary and contractionary monetary policies. Therefore, in this article, the index of monetary conditions along with ...
متن کاملCausal Nexus between Inflation and Economic Growth of Japan
This study aims to evaluate the link between economic growth and consumer price index (CPI) in Japan for the period of 1980-2014. Initial series were adjusted for stationarity using the Augmented Dickey- Fuller (ADF) test for unit root followed by the application of Johansen Co-integration Test in order to examine the long-run relationship among the variables, while the causalities were evaluat...
متن کاملThe External Determinants of Inflation: The Case of Iran
The study of determining the factors affecting inflation or consumer price index has been conducted by many macroeconomic economists nationally as well as internationally. In this paper, we assess the external determinants of inflation dynamics in Iran. For this purpose, we use an OLS single equation model and a vector error correction model (VECM). Results of the analysis reveal that money sup...
متن کاملModeling an Extended Taylor Type Equation in Indian Environment
The objective of the paper is to examine applicability of Taylor type rule in current Indian economic environment. India has gradually slackened its control on several macroeconomic variables and allowed influence of market forces in many areas. In this scenario, we tried to examine an extended Taylor type equation involving interest rates, output gap, inflation gap, foreign exchanges rate, sto...
متن کامل