No abstract

This study attempts to examine the relationship between monetary policy and housing prices in India. We use monthly data from January 2009 to December 2018 of four variables- Housing Price Index (HPI), Real Effective Exchange Rate (REER), Gross Domestic Price (GDP), and interest rate for our estimations using the Autoregressive Distributive Lag (ARDL) Model. The results from the study show that the impact of monetary policy on housing prices is significant only on lag three; however, the coefficient is very small. The results from the ARDL model are also supported by the variance decomposition of housing price. The variance decomposition of housing prices highlights that monetary policy explains around 13 percent of the variation in housing prices over a period of ten months. Further, the accumulated impulse response function reveals that with one-unit shock to interest rate results in a -0.000875 unit change in housing price. The study stipulates that, since conventional monetary policy has a modest impact on housing prices, therefore, it is insignificant for addressing the problems of real estate in India.

No abstract

Purpose: The purpose of the present study is three-fold. Firstly, it investigates whether the nominal exchange rate is fulfilling its role for macroeconomic stabilisation? Second, it examines whether the direction of exchange rate change matter for exchange rate pass-through. Third, it investigates the long-standing conjecture in macroeconomics which relates the decline in pass-through to monetary policy credibility. Design: The Autoregressive distributed lag model is used. For, the first question, the study uses the disaggregate level data of newly introduced consumer price index- combined (CPI-C). The comparison of pass-through between tradable and non-tradable goods is used. For the second issue and third issues, the data of main groups is only used. Findings: The study finds that exchange rate in India fulfils the role of macroeconomic stabilisation as pass-through is higher for tradable than non-tradable goods. The impact of direction of exchange rate on pass-through is found mixed. The monetary policy credibility matters for the pass-through for the CPI-C. However, for its groups, the evidences are mixed. Implications: The issue of pass-through is important for the macroeconomic stability and monetary policy credibility. If the pass-through does not vary between tradable and non-tradable components then nominal exchange rate is not fulfilling its role of macroeconomic stability. Originality: The paper investigates the often-neglected issues of pass-through in the Indian context. Previous studies have mostly focused on aggregate index, our study focus on disaggregated data. JEL Classification E31, E52, E58, F3, F41