A Simple Macrofiscal Model for Policy Analysis: An Application to Morocco

IMF Working Papers, July 16, 2021

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A Simple Macrofiscal Model for Policy Analysis: An Application to Morocco

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Bibliographic details

• Authors: Daniel Baksa, Roberto Cardarelli
• Published: July 16, 2021
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781513592985.001

Overview

• Describes a semistructural macrofiscal approach to simulating and forecasting macroeconomic policies.
• Focuses on only a few variables that are consistent with the New Keynesian framework.
• Emphasizes simplicity to facilitate an initial and intuitive understanding of monetary and fiscal policy transmission channels and their main impact on economic activity.
• Model adapted to Morocco and demonstrated with an illustrative scenario of policy responses to a slower-than-expected recovery from the Covid-19 pandemic, under different monetary policy and exchange rate regimes.

Model features

• Semistructural macrofiscal model aligned with the New Keynesian framework.
• Limited number of variables to maintain tractability and clarity of transmission channels.
• Capable of simulating policy responses and producing short- to medium-term forecasts for macroeconomic variables.

Application to Morocco and scenarios

• The model is adapted specifically to Morocco.
• Demonstrative illustrative scenario: policy responses to a slower-than-expected recovery from the Covid-19 pandemic.
• Scenarios consider different monetary policy regimes and different exchange rate regimes (including a peg regime and inflation targeting frameworks as noted in subjects/keywords).

Findings and key statistics

• The paper provides an application illustrating how monetary and fiscal policy transmission channels operate in the Moroccan context (qualitative description preserved from source).
• Publication metadata and counts:
  • Pages: 35
  • Volume: 2021
  • Issue: 190
  • Series: Working Paper No. 2021/190
  • Stock No: WPIEA2021190
  • DOI: https://doi.org/10.5089/9781513592985.001
  • ISBN: 9781513592985
  • ISSN: 1018-5941
• Publication date: July 16, 2021
• Authors: Daniel Baksa, Roberto Cardarelli

Policy implications and recommendations

• The model’s simplicity is intended to provide policymakers with an initial and intuitive tool to:
  • Understand monetary and fiscal policy transmission channels.
  • Assess the main impact of policy actions on economic activity in Morocco.
• Used to evaluate policy responses to shocks (e.g., slower-than-expected Covid-19 recovery) across:
  • Different monetary policy reaction functions.
  • Different exchange rate arrangements (including peg regime and inflation targeting).

Subject classifications and keywords

• Subject: Exchange rate arrangements, Foreign exchange, Inflation targeting, Monetary policy, Output gap, Production, Public debt, Real exchange rates
• Keywords: B. aggregate supply, Exchange rate arrangements, Fiscal Multiplier, Fiscal Policy, fiscal policy transmission channels, fiscal policy transmission mechanisms, Global, Inflation targeting, Maghreb, Morocco, Output gap, peg regime, Policy reaction function, Real exchange rates

IMF Working Papers — A Simple Macrofiscal Model for Policy Analysis: An Application to Morocco; Daniel Baksa and Roberto Cardarelli; July 16, 2021; Working Paper No. 2021/190; DOI: https://doi.org/10.5089/9781513592985.001

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