Download or read book Inflation Expectations and Monetary Policy in India written by Michael Debabrata Patra and published by International Monetary Fund. This book was released on 2010-04-01 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper pursues a computationally intensive approach to generate future inflation, followed by an exploration of the determinants of inflation expectations by estimating a new Keynesian type Phillips curve that takes into account country-specific characteristics, the stance of monetary and fiscal policies, marginal costs and exogenous supply shocks. The empirical results indicate that high and climbing inflation could easily seep into people’s anticipation of future inflation and linger. There is a reputational bonus for monetary policy to act against inflation now rather than going for cold turkey when societal compulsions reach a critical mass.