Assessing India's Monetary Policy under Uncertainty

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What is the potential issue with using a constant natural interest rate assumption in assessing the stance of monetary policy?

It could be misleading, especially due to the time-varying nature of the natural interest rate.

According to the literature, what are some factors that have contributed to altering the natural rates of both advanced and emerging economies post-crisis?

Supply side, demand side, regulatory, and global factors.

How was India's natural real interest rate estimated in Q4 of 2014-15?

It was estimated to be in a range of 0.6% to 3.1%.

What does a negative real interest rate gap in India suggest about the stance of the Reserve Bank's monetary policy?

It implies that the monetary policy stance was largely accommodative rather than anti-inflationary. Signup and view all the answers

Which theoretical framework was used in the paper to estimate India's natural real interest rate?

A combination of Ramsay's growth model and New-Keynesian macro-dynamics. Signup and view all the answers

What estimation technique was applied to determine India's natural real interest rate?

The Kalman filter estimation technique. Signup and view all the answers

What is the concept of trend inflation central to?

monetary policy Signup and view all the answers

Explain why the inflation target needs to be fixed in alignment with trend inflation.

To avoid unhinging inflation expectations and flattening the aggregate supply curve or imparting a deflationary bias to the economy. Signup and view all the answers

According to the regime switching model applied to a hybrid New Keynesian Philips curve, what was the trend inflation rate just before COVID19 struck?

4.1-4.3 per cent Signup and view all the answers

What does trend inflation represent after removing cyclical effects and other transitory distortions?

a common factor extracted from observed inflation rates Signup and view all the answers

Define inflation target in monetary policy.

a specific inflation rate set by the central bank as its goal Signup and view all the answers

What do the results from the regime switching model suggest about maintaining the inflation target for India?

4 per cent Signup and view all the answers

What are the three key policy rates set by the RBI?

Policy Repo Rate, Reverse Repo Rate, Marginal Standing Facility Rate Signup and view all the answers

How does monetary policy impact saving and investment?

By controlling the rate of interest and inflation, it can influence people's savings and investments. Signup and view all the answers

Explain how monetary policy helps in controlling imports and exports.

By offering reduced interest rates on loans, it helps export-oriented units to increase exports. Signup and view all the answers

What are the two main stages of a business cycle?

Boom and depression Signup and view all the answers

What is CRR and SLR in the context of banking?

CRR stands for Cash Reserve Ratio and SLR stands for Statutory Liquidity Ratio. Signup and view all the answers

How can monetary policy influence the supply of money in the economy?

It can control the credit flow, which impacts the supply of money. Signup and view all the answers

What type of loans can the credit control method affect?

Short-term loans Signup and view all the answers

Why is the unorganized money market not suitable for the use of credit control methods?

It is not suitable due to the lack of organization. Signup and view all the answers

What level of cooperation exists between commercial banks and the central bank?

There is not much cooperation. Signup and view all the answers

Why is an unstable economy not suitable for the use of credit control methods?

It is not suitable because of the instability. Signup and view all the answers

What happens if steps for credit control are not taken at the primary level?

It will not be effective later. Signup and view all the answers

Why will a lengthy plan for credit control not work satisfactorily?

It will not work satisfactorily because it is lengthy. Signup and view all the answers

What is qualitative data?

Qualitative data is information that cannot be counted, measured or easily expressed using numbers. Signup and view all the answers

What tools are used to visualize qualitative data?

Word clouds, concept maps, graph databases, timelines, and info graphics. Signup and view all the answers

What is the main focus of qualitative data analysis?

To understand what actions people take and what motivates them to take those actions. Signup and view all the answers

How does statistical analysis help in research?

It uncovers meaningful patterns, trends, and relationships in large volumes of data. Signup and view all the answers

What is the first step in the process of statistical analysis?

Data collection. Signup and view all the answers

How does qualitative data complement quantitative methods in a research project?

Qualitative data adds flavor to the essence of the project derived from quantitative methods. Signup and view all the answers