Article ID Journal Published Year Pages File Type
5087470 Journal of Asian Economics 2011 12 Pages PDF
Abstract
► The relationship between output gap and inflation as predicated by Phillips curve is relevant for India during the recent time period, i.e. between the first quarter of 2004 to the first quarter of 2009. ► Phillips curve exits only after controlling for supply shock. ► Non-linear Kalman filter approach yields more accurate output gap estimate. ► HP estimate of output gap is spurious in the Indian context since it does not account for the structural break where the Indian economy passed recently. ► The real effective exchange rate elasticity of inflation is 0.05. It suggests that real effective exchange rate has a minimal role in influencing the domestic inflation.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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