Monetary Policy Behaviour in India

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Authors

  • Kajleen Kaur
     Assistant Professor, Sri Guru Gobind Singh College of Commerce, University of Delhi, Delhi ,IN

Keywords:

Monetary Policy, Inflation, Interest Rate
Development economics

Abstract

The monetary policy of any country strives to achieve a balance between its goals of price stability and higher growth by using various monetary policy tools. In light of this, the aim of the study is to examine the monetary policy of the Reserve Bank of India for achieving these objectives using interest rate as a tool, in terms of Taylor equation for the period 1996Q1 to 2013Q3. The Autoregressive Distributed Lag bounds testing approach to cointegration is used for studying the monetary policy behavior. The paper also broadens the Taylor equation to incorporate the fiscal and open economy parameters as factors affecting monetary policy behaviour. The result suggests that the growth criterion is the most significant factor affecting the interest rate policy of the bank. It also finds inflation control and open economy volatility as important factors in the policy decision making but with lesser weightage. The fiscal parameter turns out to be insignificant. The findings suggest that the monetary policy decision making is growth enhancing.

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Published

2018-05-17

How to Cite

Kaur, K. (2018). Monetary Policy Behaviour in India. Journal of Business Thought, 6, 44–56. Retrieved from http://informaticsjournals.com/index.php/jbt/article/view/21223

Issue

Volume 6, April 2015-March 2016

Section

Articles

License

All the articles published in JBT are distributed under a creative commons license. The journal allows the author(s) to hold the copyright of their work (all usages allowed except for commercial purpose).
Received 2018-05-17
Accepted 2018-05-17
Published 2018-05-17

 

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