ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Rational Expectations and Price Behaviour in India

It has been claimed that a principal proposition of the New Classical Macro-economics, namely, the neutrality of anticipated monetary growth under rational expectations, is applicable to the Indian economy, I provide evidence to refute this view. The results presented here bear a greater claim being based, as they are, upon superior modelling and more acceptable econometric practice. They suggest, among other things, that the monetary authority in India cannot be certain of containing inflation solely by implementing a pre-announced reduction in the money growth rate, leave alone being able to do so costlessly.

Subscribers please login to access full text of the article.

New 3 Month Subscription
to Digital Archives at

826for India

$50for overseas users

Get instant access to the complete EPW archives

Subscribe now

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top