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INTRODUCTION
Inflation is a major obstacle to achieve high economic growth in the modern economy. Policy makers are working hard to bring down inflation through monetary and fiscal policies. In India inflation has been a big worry for policy makers they have been working effectively to control inflation.
Monetary policy is an effective tool if inflation arises due to excess demand but inflation arises due to cost push factors then monetary policy will not be an effective tool to control inflation
Objectives
The main objective of this study is to find out the supply side factors affecting inflation in India and the effectiveness of monetary policy to control inflation
Consecutive figure
12
10
6 inflation repo 4
iip growth
14
12
10
iip growth
0 1 -2 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
-4
-6
exchange
60
50
40
30
exchange
20
10
oil price
120
100
80
60
oil price
40
20
methodology
y= x1- x2-x3-x4+x5+x6
y= X1 = X2 = X3 = X5 = X6 = Inflation growth in index of agriculture production growth in index of industrial production growth in exchange rate changes in oil price repo rate
References
KC CHAKRABARTI(1978) INFLATION TRENDS IN INDIA
In this paper author tried to explain the cost push factors which heavily influence inflation in India. Though he had Valid arguments his statistical numbers hasnt support to His paper. Price level = +x1+x2+ x3 X1 is rate of change in agri production X2 is rate of change in industrial production X3 is rate of change in money supply
Work in progress
Statistical relationship between variables and statistical evidence to support my project, data collecting and some theory based work.