Essay on The Effects Of Inflation On Global Oil Price Shock

Essay on The Effects Of Inflation On Global Oil Price Shock

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Thus with all the tests carried out the result which came out in this paper taken by us was that the prominent player of inflation was Global oil price shock during the year 2009-2010 and a major part of the year 20110-2011 with a contribution of over 20%.Which further declined in the year 2011-2013.While in the year 2006-2008output gap contributed to inflation dynamics by a range of 15-25% which eventually reduced in the following financial crisis period. It’s impact was again seen for a short time in the first half of 2009-2010 but later declined to less than 10%.Meanwhile Fiscal Factors were contributing in almost entire study period with figure of less than 10%.In 2011-2012 the contribution rose to about 10 %, which eventually reduced during 2012-2013.Call Money Rate which represented monetary policy contributed to inflation only after 2005-2006,since then contribution laid to around 10-20% with a few exceptions during 2009-2010..
Hence with the help of Time varying SVAR model, Inflation in India was tried to be explained. The Important Players from the supply side were Crude oil prices and Exchange Rate, as they determined domestic prices since the country’s maximum petroleum requirements are still met by Imports. From the Demand Side the output gap came to be insignificant on an average, thus having an asymmetric impact on Inflation. When the output gap was high and positive, it highly contributed to the rise in inflation but contributed minutely to lower inflation when output gap was negative .It can be well understood from the fact that in supply constrained economy, even if the firms operate below capacity they are protecting their pricing power. Contribution of fiscal deficit was significant during the post crisis perio...


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... all about How the global food price affect the aggregate prices and food prices in india. For this author has used the SVAR model to analyze it for which the data has been taken for the period of 1996Q2 to 2013Q2 by further using the Baynesian estimation techniques. From the analysis and figure it can be seen that the inflation in india is mainly affected by idiosyncratic shocks of domestic food prices and supply shocks including rainfall. For the years 2008 and 2010 the effect of global food prices is the maximum on food price inflation in india, while it’s impact is also available during the years 1999-2000and 2005 when the global food price inflation was found to be below average. All in all it can be stated that Global food prices are mostly systematically transmitted to indian food prices and in someway they can answer to the fluctuations of indian food prices.

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