02211cas a2200265 a 4500 AALejournalIMF014737 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484392096 1018-5941 BD-DhAAL BD-DhAAL Anand, Rahul. Food Inflation in India : The Role for Monetary Policy / Rahul Anand, Ding Ding, Volodymyr Tulin. Washington, D.C. : International Monetary Fund, 2014. 1 online resource (23 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-through from headline inflation to core inflation. The results indicate that India's inflation is highly inertial and persistent. Due to second-round effects, the gap between headline inflation and core inflation decreases by about three fourths within one year as core inflation catches up with headline inflation. Large second-round effects stem from several factors, such as the high share of food in household expenditure and the role of food inflation in informing inflation expectations and wage setting. Analysis suggests that in order to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time. In addition, progress on structural reforms to raise potential growth is critical to reduce the burden on monetary policy. Mode of access: Internet Ding, Ding. Tulin, Volodymyr. IMF Working Papers; Working Paper ; No. 2014/178 Full text available on IMF http://elibrary.imf.org/view/journals/001/2014/178/001.2014.issue-178-en.xml IMF e-Library