ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Deba Prasad RathSubscribe to Deba Prasad Rath

Measures of Core Inflation for India

In view of increasing emphasis on 'price stability' in the formulation of monetary policy and sharp volatility in the WPI headline inflation rate, there has been a need for measures of underlying inflation rates for India as the existing measures do not provide a reliable gauge of inflation at any point of time. Against this background, this paper makes a comprehensive attempt at providing alternate estimates of core inflation for India following the principle of exclusion and limited influence estimators of trimmed mean as well as weighted median. The monthly estimates for the 16-year period from April 1983 to March 1999 reveal that 20 per cent trimmed mean WPI provides a better explanation of inflation dynamics.

Does Money Supply Process in India Follow a Mixed Portfolio - Loan Demand Model?

An examination of the determinants of the money supply is an important but often overlooked aspect in Indian monetary research. The literature distinguishes three competing models of the money supply process, namely, 'pure portfolio approach', 'pure loan demand approach' and 'mixed portfolio-loan demand approach'. While the first corresponds to the money multiplier approach, the latter two are the accommodative and structuralist views of money endogenenity of the post-Keynesian monetary theory. Using RBI monthly data, this study finds the endogenous nature of money supply in India where a paradigm of mixed portfolio loan model operates. It supports the structural approach implying that the policy stance of the monetary authority and private initiatives of banks are important in money supply determination.

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