Alternative Monetary Policy Rules for India
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
This paper empirically evaluates the operational performance of the McCallum rule, the Taylor rule and hybrid rules in India over the period 1996-2011 using quarterly data, with a view to analytically informing the conduct of monetary policy. The results show that forward-looking formulations of both rules and their hybrid version - setting a nominal output growth objective for monetary policy with an interest rate instrument - outperform contemporaneous and backward-looking specifications, especially when targeting core components of GDP and inflation, and combine the best parts of efficiency and discretion.
Series:
Working Paper No. 2012/118
Subject:
Central bank policy rate Financial services Inflation Monetary base Money National accounts Output gap Personal income Prices Production
English
Publication Date:
May 1, 2012
ISBN/ISSN:
9781475503470/1018-5941
Stock No:
WPIEA2012118
Pages:
44
Please address any questions about this title to publications@imf.org