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An Open Economy Quarterly Projection Model for Sri Lanka

Author

Listed:
  • Chandranath Amarasekara
  • Rahul Anand
  • Kithsiri Ehelepola
  • Hemantha Ekanayake
  • Vishuddhi Jayawickrema
  • Sujeetha Jegajeevan
  • Csaba Kober
  • Tharindi Nugawela
  • Sergey Plotnikov
  • Adam Remo
  • Poongothai Venuganan
  • Rasika Yatigammana

Abstract

This study documents a semi-structural model developed for Sri Lanka. This model, extended with a fiscal sector block, is expected to serve as a core forecasting model in the process of the Central Bank of Sri Lanka’s move towards flexible inflation targeting. The model includes a forward-looking endogenous interest rate and foreign exchange rate policy rules allowing for flexible change in policy behavior. It is a gap model that allows for simultaneous identification of business cycle position and long-term equilibrium. The model was first calibrated and then its data-fit was improved using Bayesian estimation technique with relatively tight priors.

Suggested Citation

  • Chandranath Amarasekara & Rahul Anand & Kithsiri Ehelepola & Hemantha Ekanayake & Vishuddhi Jayawickrema & Sujeetha Jegajeevan & Csaba Kober & Tharindi Nugawela & Sergey Plotnikov & Adam Remo & Poongo, 2018. "An Open Economy Quarterly Projection Model for Sri Lanka," IMF Working Papers 2018/149, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/149
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    Cited by:

    1. Anton Grui & Artem Vdovychenko, 2019. "Quarterly Projection Model for Ukraine," Working Papers 03/2019, National Bank of Ukraine.
    2. Naafey Sardar & Zulfiqar Hyder, 2022. "Does the source of the oil price shock matter for inflation in Pakistan: Implications for monetary policy," SBP Working Paper Series 110, State Bank of Pakistan, Research Department.
    3. Anton Grui, 2020. "Uncovered interest parity with foreign exchange interventions under exchange rate peg and inflation targeting: The case of Ukraine," IHEID Working Papers 14-2020, Economics Section, The Graduate Institute of International Studies.
    4. Karel Musil & Mikhail Pranovich & Mr. Jan Vlcek, 2018. "Structural Quarterly Projection Model for Belarus," IMF Working Papers 2018/254, International Monetary Fund.

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