Asia-Pacific Sustainable Development JournalVol. 26, No. 1108
monetary policy in India is able to influence the food inflation in the short term and the medium term. This result is contrary to conventional wisdom that monetary policy cannot influence food inflation. This maybe because the CPI-C food index comprises
a number of manufactured items, which might respond to a policy impulse. Figure 14, however,
shows that monetary policy influences the core inflation only in the long run with cycles of 0 frequency. Figure 15 again shows that the Granger coefficient is not significant across all frequencies at 5
percent significance level,
except at zero frequency, only in the long run. This clearly implies that monetary policy is ineffective in the short run and medium run in India.
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