ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Monetary Policy in the Midst of Cost-push Inflation

The Reserve Bank of India adopted inflation-targeting monetary policy based on the New Keynesian 3-equation model. How realistic are the assumptions, and how effective have monetary policy instruments been in controlling the inflation rate? Given India’s structural specificities, what are the implications of cost-push inflation for policy rate and output gap? This paper addresses these questions by identifying alternative theoretical possibilities within a simple 3-equation model and locating the Indian specificity by estimating the Phillips curve and monetary policy rule equation. The analysis points towards the constraints of monetary policy in India due to presence of a flat Phillips curve and indicates the possibility of adverse effect on output gap due to presence of Taylor’s rule.

Taming Inflation by Anchoring Inflation Expectations

By firmly anchoring inflation expectations, monetary policy can prevent a wage-price spiral and moderate the second-round effects of supply shocks, thereby avoiding an inferior macroeconomic outcome of lower growth and higher inflation.

Monetary Growth, Financial Structure, and Inflation

It is argued that a key question of the operation of monetary policy is its decomposition into a price effect and an output effect. Specifically, the
association between the easing of global monetary and liquidity conditions on the one hand, and the significant spurt in inflation, on the other, in recent
times is probed to conclude that across the world, there seems to be an association. The issues of monetary stability, price stability and financial stability are also intimately interlinked.

Some Contemporary and Classical Issues of Money and Finance

Post the pandemic, the world seems to be back on a high-inflation path, and many geographies in the advanced world have started witnessing inflation rates that were prevalent in the early 1970s.


Consequent to the lifting of the “ban” imposed on the trade of crypto-assets by the Supreme Court of India, there has been a surge of interest in investing in crypto-assets from the general public, spurred by aggressive marketing campaigns by well-funded start-ups. In the absence of proper regulation, there is a very real danger that the public may be mis-sold this product with harm to the wider economy.


Reconciling Blockchain and Data Protection Regimes

The emergence and spread of blockchain technology will have a profound effect on the working of the economy and society. The focus of this article is on how the spread of the blockchain technology has rendered redundant the various provisions of the Personal Data Protection Bill, 2019.


A Social Theory of Money

Money by Geoffrey Ingham, Cambridge: UK, Polity, 2020; pp 154, £45 (hardback), £14.99 (paperback).


Finance, Banking, Money, in That Order

The “Banking: Theory & Policy” class of 2020–21 was a sounding board. The comments of an anonymous reviewer added value to an earlier draft. The usual caveats apply.

Evolving Contours of Monetary Policy

Monetary policy has emerged as an important tool of economic policy both in developed and developing economies. The monetary and financial system is far more complex today than it has been in the past. Financial intermediation has reached a high level of sophistication, which has itself become a source of concern. The impact of monetary policy action can be transmitted through a variety of channels, some of which though recognised in the past, have become more important. While the traditional issues such as the objectives of monetary policy and the possible trade-off among them remain relevant, they need to be related to the far-reaching changes in the institutional environment at home and abroad. The changing objectives of monetary policy, newly evolving instruments of monetary control and the transmission mechanism and issues related to autonomy in the pursuit of monetary policy are examined.



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