Currency equivalent monetary aggregates as leading indicators of inflation

Paul, Sunil; Ramachandran, M.

doi:10.1016/j.econmod.2011.04.007

Cited by 3 publications

(7 citation statements)

References 36 publications

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“…Similar results were reported by Bhattacharya and Lodh () and Virmani () in the Indian context. Recently, Paul (), Singh et al . () and Kapur () attributed these theoretically inconsistent results to unavailability of reliable output gap and supply shock measures.…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

“…Similar results were reported by Bhattacharya and Lodh (1990) and Virmani (2004) in the Indian context. Recently, Paul (2011), Singh et al (2011 and Kapur (2013) attributed these theoretically inconsistent results to unavailability of reliable output gap and supply shock measures. In addition, the estimates of adjusted R-squared (R 2 ) provided at the end of the Table 1, indicate that the models estimated with alternative real money gap measures have an edge over Philips curve model in explaining inflation.…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

“…See Ramachandran et al . (), and Paul and Ramachandran (, ) for a detailed discussion on the relevance of the various monetary aggregates in India.…”

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confidence: 99%

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Money and Inflation in India: Evidence From P‐star Model

Paul

Rather

Ramachandran

2016

Bulletin of Econ Res

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This study uses P‐star model to examine the role of money in explaining inflation in India. In particular, we compare the performance of traditional Phillips curve approach against P‐star model in forecasting inflation. Moreover, the study estimates P‐star model using the alternative measures of money such as simple sum and Divisia M3, to examine the relevance of aggregation theoretic monetary aggregates in explaining inflation. The empirical results indicate that P‐star model with real money gap has an edge over traditional Phillips curve approach in forecasting inflation. More importantly, we found that the P‐star model estimated with Divisia real money gap performs better than its simple sum counterpart. These empirical findings suggest that the changes in real money gap play a crucial role in explaining inflation in India.

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Section: Empirical Results and Discussionmentioning

confidence: 99%

Section: Empirical Results and Discussionmentioning

confidence: 99%

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Money and Inflation in India: Evidence From P‐star Model

Paul

Rather

Ramachandran

2016

Bulletin of Econ Res

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“…A recent application of this methodological approach is due to Ribba (2011), where a criticism of the Fama interpretation of the Fisher effect is provided and, moreover, inflation is interpreted as a long-run predictor of short-term nominal interest rates, whereas the converse does not hold. In another recent paper, Paul and Ramachandran (2011) investigate the role of the currency equivalent monetary aggregate as a leading indicator of inflation for India in a cointegration framework. They find that a one-for-one long-run relation between the two variables is not rejected by data and then they test for the presence of long-run unidirectional causality running from the monetary aggregate to the inflation.…”

Section: The Approach Of the Papermentioning

confidence: 99%

Euro area inflation as a predictor of national inflation rates

Cavallo

Ribba

2014

Journal of Policy Modeling

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The stability of inflation differentials is an important condition for the smooth working of a currency area, such as the European Economic and Monetary Union. In the presence of stability, changes in national inflation rates, while holding Euro-area inflation fixed contemporaneously, should be only transitory. If this is the case, the rate of inflation of the whole area can also be interpreted as a predictor, at least in the long run, of the different national inflation rates. However, in this paper we show that this condition is satisfied only for a small number of countries, including France and Italy. Better convergence results for inflation differentials are, instead, found for the USA. Some policy implications are drawn for the Eurozone

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“…Source:Paul and Ramachandran (2011).South Asian Journal of Macroeconomics andPublic Finance, 2, 2 (2013): 107-143…”

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Do Currency Equivalent Monetary Aggregates Have an Edge over Their Simple Sum Counterparts?

Paul

Ramachandran

2013

South Asian Journal of Macroeconomics and Public Finance

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The currency equivalent (CE) monetary aggregates are interpreted as aggregation theoretic money stock measures by Rotemberg et al. ( 1995 ), Barnett ( 1991 ) and Kelly ( 2009 ) and are far more superior to simple sum aggregates as a policy variable. In this context, the components of four official measures of monetary constructs—M1, M2, M3 and L1—are used to construct monthly CE monetary aggregates for the period from April 1993 to June 2009. Quarterly estimates of CE aggregates are also obtained by taking quarterly averages of monthly aggregates. The empirical evidences in terms of information content, velocity behaviour and cyclical behaviour show that there is a potential gain of using CE aggregates as compared to their sum counterparts in applications of policy interest. JEL Classification: C43 E49

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Currency equivalent monetary aggregates as leading indicators of inflation

Cited by 3 publications

References 36 publications

Money and Inflation in India: Evidence From P‐star Model

Money and Inflation in India: Evidence From P‐star Model

Euro area inflation as a predictor of national inflation rates

Do Currency Equivalent Monetary Aggregates Have an Edge over Their Simple Sum Counterparts?

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