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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.
Inflation --- Macroeconomics --- Taxation --- Mathematical Methods --- Methodological Issues: General --- Computational Techniques --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- Business Fluctuations --- Cycles --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Business Taxes and Subsidies --- Labor Economics: General --- Price Level --- Deflation --- Economic growth --- Public finance & taxation --- Labour --- income economics --- Cyclical indicators --- Business cycles --- Value-added tax --- Labor --- Taxes --- Prices --- Spendings tax --- Labor economics --- Banks and Banking --- Money and Monetary Policy --- Production and Operations Management --- Monetary Policy --- Central Banks and Their Policies --- Open Economy Macroeconomics --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Macroeconomics: Production --- Personal Income, Wealth, and Their Distributions --- Banking --- Monetary economics --- Central bank policy rate --- Monetary base --- Output gap --- Personal income --- Financial services --- Money --- Production --- National accounts --- Interest rates --- Money supply --- Economic theory --- Income --- Botswana --- India --- Monetary policy --- Finance
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This paper uses a set of routinely collected high-frequency data in low-income countries (LICs) to construct an aggregate and a comprehensive index of economic activity which could serve (i) as a measure of the direction of economic activity; and (ii) as a useful input in analyzing contemporaneous real sector performance in LICs in the absence of high-frequency, and often outdated, GDP data. It could also serve as a useful tool for policymakers to gauge short-term dynamics of economic activity and shape appropriate and timely policy responses.
Economic indicators --- Business cycles --- Gross domestic product --- Econometric models. --- Africa, Sub-Saharan --- Economic conditions. --- Domestic product, Gross --- GDP --- Gross national product --- Economic cycles --- Economic fluctuations --- Cycles --- Business indicators --- Indicators, Business --- Indicators, Economic --- Leading indicators --- Economic history --- Quality of life --- Economic forecasting --- Index numbers (Economics) --- Social indicators --- Exports and Imports --- Investments: General --- Money and Monetary Policy --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Trade: General --- Investment --- Capital --- Intangible Capital --- Capacity --- International economics --- Monetary economics --- Macroeconomics --- Capital inflows --- Domestic credit --- Exports --- Return on investment --- Export performance --- Balance of payments --- Money --- International trade --- National accounts --- Capital movements --- Credit --- Saving and investment --- Inflation --- Taxation --- Mathematical Methods --- Methodological Issues: General --- Computational Techniques --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- Business Fluctuations --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Business Taxes and Subsidies --- Labor Economics: General --- Price Level --- Deflation --- Economic growth --- Public finance & taxation --- Labour --- income economics --- Cyclical indicators --- Value-added tax --- Labor --- Taxes --- Prices --- Spendings tax --- Labor economics --- United States --- Botswana --- Income economics
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