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The empirical findings of the study broadly confirm higher threshold inflation and higher growth in emerging market economies than in advanced economies. (Representative image)
MUMBAI: A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side.
Referring to the 2009 crisis, the study by Development Research Group (DRG) on Risk Premium Shocks and Business Cycle Outcomes in India , said that at the micro-level, the interest rate spread, attributed to risk premium on loans, increased in response to a rise in loan defaults during the post-2009 period.
A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. Referring to the 2009 crisis, the study by Development Research Group (DRG) on Risk Premium Shocks and Business Cycle Outcomes in India , said that at the micro-level, the interest rate spread, attributed to risk premium on loans, increased in response to a rise in loan defaults during the post-2009 period. Also, the credit growth was found to be negatively associated with the loan default rate, indicating that a shock to the borrowing sectors has a significant negative impact on credit growth, it added.
Lower inflation target to hurt growth, but will bring financial stability: RBI study
By IANS |
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Reserve Bank of India (RBI). (File Photo: IANS). Image Source: IANS News
Mumbai, May 24 : A Reserve Bank of India (RBI) study has suggested a decision to have a lower inflation target would jeopardise the long-term growth but help in bringing in financial stability. The policy makers may choose to set the inflation target below the threshold level, but only by consciously sacrificing long-term real growth of GDP and hence the adverse impact on the rate of poverty alleviation, said the study titled Threshold Level of Inflation - Concept and Measurement
Tackle economic downturn with a mix of fiscal and monetary policies: Report freepressjournal.in - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from freepressjournal.in Daily Mail and Mail on Sunday newspapers.