TY - BOOK ID - 84874287 TI - Food Inflation in India : The Role for Monetary Policy AU - Anand, Rahul. AU - Ding, Ding. AU - Tulin, Volodymyr. PY - 2014 SN - 1498323111 1498392342 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Food prices KW - Monetary policy KW - Rural poor KW - Rural poverty KW - Poor KW - Monetary management KW - Economic policy KW - Currency boards KW - Money supply KW - Food KW - Agricultural prices KW - Food industry and trade KW - Econometric models. KW - Economic conditions KW - Prices KW - Banks and Banking KW - Foreign Exchange KW - Inflation KW - Macroeconomics KW - Production and Operations Management KW - Monetary Policy KW - Central Banks and Their Policies KW - Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation KW - Fiscal and Monetary Policy in Development KW - Price Level KW - Deflation KW - Macroeconomics: Production KW - Interest Rates: Determination, Term Structure, and Effects KW - Commodity Markets KW - Currency KW - Foreign exchange KW - Finance KW - Output gap KW - Real exchange rates KW - Real interest rates KW - Commodity price shocks KW - Production KW - Financial services KW - Economic theory KW - Interest rates KW - India UR - https://www.unicat.be/uniCat?func=search&query=sysid:84874287 AB - Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-through from headline inflation to core inflation. The results indicate that India's inflation is highly inertial and persistent. Due to second-round effects, the gap between headline inflation and core inflation decreases by about three fourths within one year as core inflation catches up with headline inflation. Large second-round effects stem from several factors, such as the high share of food in household expenditure and the role of food inflation in informing inflation expectations and wage setting. Analysis suggests that in order to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time. In addition, progress on structural reforms to raise potential growth is critical to reduce the burden on monetary policy. ER -