This article attempts to study the significance of various channels in the transmission of monetary policy measures to inflation in the Indian economy. With the help of structural vector autoregression (SVAR) models, we find that interest rate and credit channels are the most important channels. Tests for structural change provide evidence for structural change. Estimations for two sub-periods, corresponding roughly to parts of the sample up to and after the Global Financial Crisis, show that after the crisis, the interest rate and exchange rate channels have become more important. One interesting observation is the positive response of inflation to the policy rate, which has been termed the price puzzle in the literature.
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