• Khurram Khowaja

Inflation in India trended higher from the mid-2000s after being low for decades. It reached 8 percent by 2008 and 10 to 11 percent in 2009 and 2010 respectively, so, there is a need to identify the dynamics of inflation in India, including the role of Global food price index or international commodity prices, backward looking inflation, forward looking inflation, and output gap. The analysis of inflation dynamics using the New Keynesian version, suggests that forward looking inflation, backward looking inflation are important determinant of India’s inflation as compare to other measure or more precisely the output gap and global food prices. After using ordinary least square (OLS) method it is found that, after being low and stable, India’s inflation has increased since the mid of 2000. Inflation expectations have a direct effect on price changes, thus providing an important tool to control inflation. International commodity prices and output gap does not show any significant relationship with inflation.

Inflation. Money growth. Output gap

"Causes of Inflation in India: A new Keynesian Approach", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.6, Issue 1, page no.1976-1990, January-2019, Available :http://www.jetir.org/papers/JETIR1901D84.pdf

"Causes of Inflation in India: A new Keynesian Approach", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.6, Issue 1, page no. pp1976-1990, January-2019, Available at : http://www.jetir.org/papers/JETIR1901D84.pdf