Paper Title :Evolution and Effectiveness of Monetary Policy Frameworks In India

Author :Nawab Hussain

Article Citation :Nawab Hussain , (2022 ) " Evolution and Effectiveness of Monetary Policy Frameworks In India " , International Journal of Management and Applied Science (IJMAS) , pp. 112-120, Volume-8,Issue-1

Abstract : Abstract - This paper analyzes the evolution and effectiveness of monetary policy frameworks in India. It tries to look into how the RBI managed to deal with changing macro-paradigms and decided the paths of monetary policy. This chapter is based on a historical analysis of monetary policy frameworks along with an empirical study of key monetary variables. Through historical analysis, this study tries to identify, locate, and explain how monetary policy frameworks have changed. For empirical analysis of time series data, Autoregressive Distributed Lags (ARDL) methodology is applied. Two models representing the money-growth targeting and inflation targeting framework are analyzed in the study. Our results show the existence of only a short-run relationship for the model examining the money- growth targeting framework, and a long-run relationship for the model explaining the inflation- targeting framework. We find that in the short-run, broad money growth has a positive impact on WPI-based inflation, while real GDP growth has a negative impact on WPI-based inflation. Our results suggest that the effectiveness of the inflation-targeting framework in influencing targeted variables is weak and inconclusive. Keywords- Monetary Policy, Inflation, Inflation Targeting, Money Growth targeting, Multiple Indicators Approach, Reserve Bank of India

Type : Research paper

Published : Volume-8,Issue-1

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