Financial conditions index (FCI), inflation and growth: Some evidence
This paper first estimate financial conditions index (FCI) for India and then examines the empirical performance of the financial conditions index (FCI) to predict inflation and GDP growth. For optimal coverage of all major set of indicators, those which are determining the Indian economies, financi...
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| Format: | Article |
| Language: | English |
| Published: |
General Association of Economists from Romania
2017-09-01
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| Series: | Theoretical and Applied Economics |
| Subjects: | |
| Online Access: |
http://store.ectap.ro/articole/1300.pdf
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| Summary: | This paper first estimate financial conditions index (FCI) for India and then examines the
empirical performance of the financial conditions index (FCI) to predict inflation and GDP growth.
For optimal coverage of all major set of indicators, those which are determining the Indian
economies, financial conditions, so we have broken financial conditions index into four sub-indices
including major key indicator. The sub –indices of FCI include (i) short term rate of interest (CMR),
(ii) exchange rate, (iii) housing price index (iv) FDI total inflow, each with equal weights. Based on
granger causality and correlation test with quarterly data, the finding of this paper is the financial
condition index is able to predict inflation bitterly. |
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| ISSN: | 1841-8678 1844-0029 |