Inflation Dynamics in Developing Economies: Empirical Evidence from India

Abstract

In view of the structural problems, supply-side shocks, and external sector vulnerabilities, the macroeconomic issue of inflation is an endemic one in all developing economies. The present research aimed to use the empirical data provided by Bharat to research the macroeconomic issues of inflation in the context of developing economies. The main research aims are to find the main cause of inflation and to understand the volatility and persistence of the macroeconomic issues of inflation. By using the secondary data provided by the macroeconomic variables like food and fuel prices, exchange rates and the fiscal deficits of the economy. The research aims to use the quantitative methodology for the time ranging from 2000 to 2024. The relative contribution of the macroeconomic variables is analyzed by performing multiple regression analysis in order to understand that macroeconomic issue of inflation according to the research aims the main causes of inflation are supply side shocks and the depreciation of the exchange rates, While the impact of Fiscal deficit is quite low. For Inflation management, the research interpreted the remedies we have suggested in Forward Strategies.