An augmented P-star model of Indian inflation. Issue 26 (2nd June 2020)

• Record Type: Journal Article
• Authors: Holzschuh, Peter; Mishra, Ankita; Misra, Jayant; Moosa, Imad A.; Nath, Shyam; Tawadros, George B.
• Is Part Of: Applied economics. Volume 52:Issue 26(2020)
• Page Start: 2795
• Page End: 2806
• Publication Date: 2020-06-02
• Subjects: Inflation -- India -- P-star model -- structural time series modelling; C22 -- E31; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2019.1696935
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: An augmented P-Star model is estimated and tested to identify the drivers of inflation in India. The model includes monetary and non-monetary factors, demand-pull and cost-push factors, and domestic as well as foreign factors. The results show that inflation in India is driven by a combination of monetary factors and non-monetary factors, some of which affect inflation on the supply side while others operate on the demand side. It turns out, however, that inflation in India is determined more by domestic rather than foreign factors.