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

Author/Editor:

Douglas Laxton ; Andrew Berg ; Philippe D Karam

Publication Date:

March 1, 2006

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2006/080

Subject:

Exchange rates Inflation Output gap Real exchange rates Real interest rates

English

Publication Date:

March 1, 2006

ISBN/ISSN:

9781451863406/1018-5941

Stock No:

WPIEA2006080

Pages:

45

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