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Inflation And Inflation-Uncertainty In India: The Policy Implications Of The Relationship, Abdur Chowdhury
Inflation And Inflation-Uncertainty In India: The Policy Implications Of The Relationship, Abdur Chowdhury
Abdur R. Chowdhury
Purpose – Inflation and its related uncertainty can impose costs on real economic output in any economy. This paper aims to analyze the relationship between inflation and inflation uncertainty in India. Design/methodology/approach – The methodology uses a generalized autoregressive conditional heteroscedasticity (GARCH) model and Granger Causality test. Findings – Initial estimates show the inflation rate to be a stationary process. The maximum likelihood estimates from the GARCH model reveal strong support for the presence of a positive relationship between the level of inflation and its uncertainty. The Granger causality results indicate a feedback between inflation and uncertainty. Research limitations/implications – …