Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach
This study attempts to evaluate the monetary policy of the Reserve Bank of India (RBI) based on an investigation of the policy statements. The analysis based on text mining of the central bank’s monetary policy statements seeks to unravel the information considered by the central bank and the proces...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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SAGE Publishing
2021-07-01
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| Series: | SAGE Open |
| Online Access: | https://doi.org/10.1177/21582440211033826 |
| _version_ | 1818355905656258560 |
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| author | Amrendra Pandey Jagadish Shettigar Amarnath Bose |
| author_facet | Amrendra Pandey Jagadish Shettigar Amarnath Bose |
| author_sort | Amrendra Pandey |
| collection | DOAJ |
| description | This study attempts to evaluate the monetary policy of the Reserve Bank of India (RBI) based on an investigation of the policy statements. The analysis based on text mining of the central bank’s monetary policy statements seeks to unravel the information considered by the central bank and the processes followed in making its inflation forecasts. The findings indicate that although the RBI examined high-frequency economic indicators, its inflation forecasts have generally been off the mark. Specifically, the monetary policy committee failed to foresee the sharp disinflation that followed the demonetization announced on November 8, 2016. This failure resulted in a high real interest rate regime that dealt a blow to the economy staggering under the effects of demonetization. Our research findings show that the monetary policy governance practices need to be refined and better aligned to economic realities, particularly under the RBI’s new monetary policy framework. |
| first_indexed | 2024-12-13T19:48:45Z |
| format | Article |
| id | doaj.art-a3ed3dddb21d4a9d8f5f19212547ac90 |
| institution | Directory Open Access Journal |
| issn | 2158-2440 |
| language | English |
| last_indexed | 2024-12-13T19:48:45Z |
| publishDate | 2021-07-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | SAGE Open |
| spelling | doaj.art-a3ed3dddb21d4a9d8f5f19212547ac902022-12-21T23:33:30ZengSAGE PublishingSAGE Open2158-24402021-07-011110.1177/21582440211033826Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis ApproachAmrendra Pandey0Jagadish Shettigar1Amarnath Bose2Birla Institute of Management Technology, Greater Noida, IndiaBirla Institute of Management Technology, Greater Noida, IndiaBirla Institute of Management Technology, Greater Noida, IndiaThis study attempts to evaluate the monetary policy of the Reserve Bank of India (RBI) based on an investigation of the policy statements. The analysis based on text mining of the central bank’s monetary policy statements seeks to unravel the information considered by the central bank and the processes followed in making its inflation forecasts. The findings indicate that although the RBI examined high-frequency economic indicators, its inflation forecasts have generally been off the mark. Specifically, the monetary policy committee failed to foresee the sharp disinflation that followed the demonetization announced on November 8, 2016. This failure resulted in a high real interest rate regime that dealt a blow to the economy staggering under the effects of demonetization. Our research findings show that the monetary policy governance practices need to be refined and better aligned to economic realities, particularly under the RBI’s new monetary policy framework.https://doi.org/10.1177/21582440211033826 |
| spellingShingle | Amrendra Pandey Jagadish Shettigar Amarnath Bose Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach SAGE Open |
| title | Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach |
| title_full | Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach |
| title_fullStr | Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach |
| title_full_unstemmed | Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach |
| title_short | Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach |
| title_sort | evaluation of the inflation forecasting process of the reserve bank of india a text analysis approach |
| url | https://doi.org/10.1177/21582440211033826 |
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