publication . Preprint . Article . 2014

Exchange Rate Regimes and Inflation: Evidence from India

Biswajit Mohanty; N.R. Bhanumurthy;
Open Access
  • Published: 03 Apr 2014
Abstract
Exchange rate stability is crucial for inflation management as a stable rate is expected to reduce domestic inflation pressures through a `policy discipline effect'- restricting money supply growth, and a `credibility effect'- inducing higher money demand and reduced velocity of money. Alternatively, the impossibility trillema predicts that in the presence of an open capital account, a stable exchange rate may lead to lack of control on monetary policy and, hence, higher inflation. Using a monetary model of Inflation, this paper investigates the impact of the de facto stable exchange rate regime on inflation in India during different episodes of exchange rate st...
Subjects
free text keywords: Exchange rate regime ; Inflation ; Money Supply ; ARDL Model ; India, jel:E52, jel:F33, jel:F41, General Economics, Econometrics and Finance, Economics, Inflation, media_common.quotation_subject, media_common, Sterilization (economics), Inflation targeting, Monetary economics, Monetary policy, Money supply, Exchange rate, Macroeconomics, Real interest rate, Inflation in India
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publication . Preprint . Article . 2014

Exchange Rate Regimes and Inflation: Evidence from India

Biswajit Mohanty; N.R. Bhanumurthy;