Comparing Impact of Broad Money Supply and Stock Prices on the Inflation Rate through Financial Condition Index in the Context of Indian Economy

International Journal of Economics and Management Studies

© 2017 by SSRG - IJEMS Journal

Volume 4 Issue 11

Year of Publication : 2017

Authors : Sayan Banerjee

10.14445/23939125/IJEMS-V4I11P105

How to Cite?

Sayan Banerjee, "Comparing Impact of Broad Money Supply and Stock Prices on the Inflation Rate through Financial Condition Index in the Context of Indian Economy," SSRG International Journal of Economics and Management Studies, vol. 4,  no. 11, pp. 36-39, 2017. Crossref, https://doi.org/10.14445/23939125/IJEMS-V4I11P105

Abstract:

The aim of this article is to explore relative impact of two financial instruments, Broad Money Supply and Share of Stock, on the inflationary pressure in Indian economy. To do so, two separate Financial Condition Index (FCI) are constructed by incorporating these financial instrument variables along with two other monetary variables, namely short term interest rate and foreign exchange rate. The FCIs are then co-related with inflation rate to identify incorporation of which of these two financial variables in FCIyield a better result. It is found out that broad money supply creates greater impact on the financial condition and thereby inflation rate in the context of Indian economy.

Keywords:

Financial Condition Index, Inflation Rate, Broad Money Supply, Stock Price.

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