1. Fiscal Transfers and Inflation: Evidence from India
- Author:
- Girish Bahal and Anand Shrivastava
- Publication Date:
- 12-2019
- Content Type:
- Working Paper
- Institution:
- Centre for Sustainable Employment, Azim Premji University
- Abstract:
- Controlling for monetary policy, government transfers are potentially inflationary. This, however, may not be true when the economy is demandconstrained. Using a panel data of 17 Indian states over 30 years, we show that government transfers via welfare programs do not lead to inflation. For identification, we use a narrative shock series of transfer spending that is based on the introduction of new welfare programs. We then look at a specific program, NREGA, which has been shown to increase rural wages, and show that its implementation did not increase inflation.
- Topic:
- Economics, Government, Labor Issues, Monetary Policy, Employment, Inflation, and Demand
- Political Geography:
- India