An Open Economy Quarterly Projection Model for Sri Lanka

Author/Editor:

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

Publication Date:

June 25, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

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.

Series:

Working Paper No. 18/149

Subject:

English

Publication Date:

June 25, 2018

ISBN/ISSN:

9781484361511/1018-5941

Stock No:

WPIEA2018149

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

59

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