A Note on the Choice of Appropriate Index of Inflation for India
5 Pages Posted: 16 Jul 2008
Date Written: July 16, 2008
Inflation targeting requires appropriately defined price index - be it wholesale price index or consumer price index. For an open emerging economy like India, where inflation targeting may not be the sole objective of the monetary authority, interrelation among the measures of inflation, economic growth, money supply and exchange rate is also important. The VAR analysis indicates that this interrelation is stronger for the wholesale price index in case of India.
Keywords: inflation targeting, price index, VAR analysis
JEL Classification: E31, E52
Suggested Citation: Suggested Citation