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A Practical Model-Based Approach to Monetary Policy Analysis: Overview

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Author Info

  • Douglas Laxton
  • Andrew Berg
  • Philippe D Karam

Abstract

This paper motivates and describes an approach to forecasting and monetary policy analysis based on the use of a simple structural macroeconomic model, along the lines of those in use in a number of central banks. It contrasts this approach with financial programming and its emphasis on monetary aggregates, as well as with more econometrically driven analyses. It presents illustrative results from an application to Canada. A companion paper provides a more detailed how-to guide and introduces a set of tools designed to facilitate this approach.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/80.

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Length: 45
Date of creation: 01 Mar 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/80

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Related research

Keywords: Monetary aggregates; Forecasting models; Economic models; inflation; monetary policy; monetary fund; aggregate demand; central bank; inflation targeting; real interest rate; monetary economics; monetary aggregate; inflation target; nominal interest rate; monetary policy reaction function; monetary transmission; monetary transmission mechanism; money demand; rational expectations; inflation equation; optimal monetary policy; foreign exchange; inflation-targeting; monetary policy rules; inflation rate; monetary policy transmission mechanism; price level; monetary authorities; adaptive expectations; monetary policy rule; monetary policy regime; real interest rates; monetary policy reaction functions; national bank; low inflation; real output; monetary policy instrument; increase in interest rates; rate of inflation; monetary regimes; high inflation; low levels of inflation; loose monetary policy; inflationary expectations; monetary transmission mechanisms; inflation targeting framework; measure of inflation; inflation process; monetary framework; money balances; inflationary impact; monetary policy regimes; transmission of monetary policy; macroeconomic analysis; monetary aggregate targets; monetary theory; inflation response; monetary accounts; inflation ? equation;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Citations

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Cited by:
  1. Hassan, Rubina & Shahzad, Mirza Muhammad, 2011. "A macroeconometric framework for monetary policy evaluation: A case study of Pakistan," Economic Modelling, Elsevier, vol. 28(1-2), pages 118-137, January.
  2. Eyal Argov & David Rose & Philippe D Karam & Natan P. Epstein & Douglas Laxton, 2007. "Endogenous Monetary Policy Credibility in a Small Macro Model of Israel," IMF Working Papers 07/207, International Monetary Fund.
  3. Dora M. Iakova, 2007. "Flattening of the Phillips Curve," IMF Working Papers 07/76, International Monetary Fund.
  4. Luis A.V. Catão & Adrian Pagan, 2011. "The Credit Channel and Monetary Transmission in Brazil and Chile: A Structured VAR Approach," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.), Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 5, pages 105-144 Central Bank of Chile.
  5. Hostland, Doug & Karam, Philippe, 2006. "Assessing debt sustainability in emerging market economies using stochastic simulation methods," Policy Research Working Paper Series 3821, The World Bank.
  6. Pablo Mendieta Ossio, 2010. "The renaissance of Friedman hypothesis: nature of global financial crisis and consequences in a small open and highly dollarized economy," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 13(1), pages 119-151, December.
  7. Igor Ermolaev & Michel Juillard & Ioan Carabenciov & Charles Freedman & Douglas Laxton & Ondra Kamenik & Dmitry Korshunov, 2008. "A Small Quarterly Projection Model of the US Economy," IMF Working Papers 08/278, International Monetary Fund.
  8. John T. Cuddington & Abdel M. Zellou, 2012. "A Simple Mineral Market Model: Can it produce Super Cycles in prices?," Working Papers 2012-05, Colorado School of Mines, Division of Economics and Business.
  9. Philippe D Karam & Doug Hostland, 2006. "Specification of a Stochastic Simulation Model for Assessing Debt Sustainability in Emerging Market Economies," IMF Working Papers 06/268, International Monetary Fund.
  10. Jared Laxton & Igor Ermolaev & Charles Freedman & Ondra Kamenik & Michel Juillard & Douglas Laxton & Ioan Carabenciov & Dmitry Korshunov, 2008. "A Small Quarterly Multi-Country Projection Model," IMF Working Papers 08/279, International Monetary Fund.
  11. Poghosyan, K. & Boldea, O., 2011. "Structural versus Matching Estimation: Transmission Mechanisms in Armenia," Discussion Paper 2011-104, Tilburg University, Center for Economic Research.
  12. Ioan Carabenciov & Charles Freedman & Roberto Garcia-Saltos & Douglas Laxton & Ondra Kamenik & Petar Manchev, 2013. "Gpm6," IMF Working Papers 13/87, International Monetary Fund.
  13. Michel Juillard & Charles Freedman & Dmitry Korshunov & Douglas Laxton & Ondra Kamenik & Ioan Carabenciov & Igor Ermolaev & Jared Laxton, 2008. "A Small Quarterly Multi-Country Projection Model with Financial-Real Linkages and Oil Prices," IMF Working Papers 08/280, International Monetary Fund.
  14. Jorge Roldos, 2006. "Disintermediation and Monetary Transmission in Canada," IMF Working Papers 06/84, International Monetary Fund.
  15. Poghosyan, K., 2012. "Structural and reduced-form modeling and forecasting with application to Armenia," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5590845, Tilburg University.
  16. Ásgeir Daníelsson & Magnús F. Gudmundsson & Svava J. Haraldsdóttir & Thorvardur T. Ólafsson & Ásgerdur Ó. Pétursdóttir & Thórarinn G. Pétursson & Rósa Sveinsdóttir, 2009. "QMM. A Quarterly Macroeconomic Model of the Icelandic Economy," Economics wp41, Department of Economics, Central bank of Iceland.
  17. Dale F. Gray; & Robert C. Merton & Zvi Bodie, 2009. "New Framework for Measuring and Managing Macrofinancial Risk and Financial Stability," Working Papers Central Bank of Chile 541, Central Bank of Chile.
  18. International Monetary Fund, 2007. "A Simple Dge Model for Inflation Targeting," IMF Working Papers 07/197, International Monetary Fund.

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