Regime shifts in Indian Monetary Policy and Tenures of RBI Governors

The regime shifts in Indian monetary policy during the period 1998–2017 are estimated by applying a multivariate Markov-switching Vector Autoregression (MS-VAR) model. It is found that, in general, Indian monetary policy during this period could be roughly divided into two main phases—one that prevailed from 1998 to 2011 and the other from 2011 to 2016. The tenure of governor Jalan closely corresponds to one regime which also sporadically appears during governor Reddy’s time. The other regime overlaps with the tenure of governor Rajan. In contrast, governor Subbarao’s tenure does not correspond to any specific regime.