This study examines the relationships between inflation, output growth and their uncertainties for India over the period from 1971 to 2015. The paper extends the existing empirical literature by employing a regime switching model to understand the dynamics of the above linkages in different inflation and output growth regimes of India. Our estimated results indicate that inflation is a positive determinant of output growth in the low-growth regime. Furthermore, output growth significantly boosts inflation during low-inflation regime. Thus in a situation, when both inflation and output growth are low, moderate inflation is helpful to growth as well as rise in growth feeds back into inflation. On the other hand, during high-inflation regime, nominal uncertainty significantly reduces inflation, thus providing evidence in support of the price “stabilization” motive of the monetary authority.

中文翻译：

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印度通货膨胀、产出增长和不确定性之间的非线性关系：来自双变量阈值模型的新证据

本研究考察了 1971 年至 2015 年印度通货膨胀、产出增长及其不确定性之间的关系。 本文通过采用政权转换模型来扩展现有的实证文献，以了解上述联系在不同通胀和产出增长中的动态印度政权。我们的估计结果表明，在低增长体制下，通货膨胀是产出增长的积极决定因素。此外，在低通胀时期，产出增长显着推高了通胀。因此，在通货膨胀和产出增长都较低的情况下，温和的通货膨胀有利于增长，而增长的上升又会反作用于通货膨胀。另一方面，在高通胀时期，名义不确定性显着降低了通胀，