Contagion from the global crisis necessitated use of fiscal stimulus measures in India during 2008-10 in order to contain a major slowdown in economic growth. Given the usual downward inflexibility of fiscal deficit once it reaches a high level, as has been experienced by India in the past,...

The dynamic interactions between monetary policy and asset prices have conventionally been examined in terms of the asset price channel of transmission of monetary policy, given the pre-crisis analytical consensus against the use of monetary policy to respond directly to asset price inflation....

Using area-wide data, we simulate the responses of inflation and real output following monetary shocks in the EMU. We find that short-term interest rate shocks have a significant impact on real activity, but hardly on prices. M3 shows a perverse short-term response to a monetary contraction,...

Every financial crisis leaves behind important lessons, while exposing the limitations of the policy framework for preventing a systemic crisis. The sub-prime crisis has seriously dented the credibility of every institution vested with the responsibility for promoting financial stability....

Using area-wide data, we perform a VAR analysis to simulate the responses of inflation and real output following monetary shocks in the EMU. We find that short-term interest rate shocks have a significant impact on real activity, but hardly on prices. M3 shows a perverse short-term response to a...

In India, there is a large divergence between CPI and WPI inflation trends in the past, wide dispersion in inflation across commodity groups within WPI, and significant volatility in headline WPI inflation under the influence of supply shocks, the statistical limitations of prices data have...

The fiscal response in India to deal with the contagion from the global crisis during 2008-10 was driven by the need to arrest a major slowdown in economic growth. However, there could be medium-term risks to the future inflation path, in the absence of timely fiscal consolidation. As...

This paper highlights that an open economy, like Oman, could often enjoy partial monetary policy independence despite operating with a fixed peg, which may appear as a clear violation of the 'macroeconomic trilemma'. While explaining the country-specific factors that create the scope for partial...

The six Gulf Cooperation Council (GCC) countries (namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and U.A.E.) have exhibited considerable cooperation in the past for deepening the process of economic integration, and there is an animated debate in the academic and policy circles as to whether...