## An Estimated Model with Macrofinancial Linkages for India

_IMF Working Papers, January 1, 2010_

## Source details

**Canonical URL:** [An Estimated Model with Macrofinancial Linkages for India](https://www.imf.org/en/publications/wp/issues/2016/12/31/an-estimated-model-with-macrofinancial-linkages-for-india-23529)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/an-estimated-model-with-macrofinancial-linkages-for-india-23529/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/an-estimated-model-with-macrofinancial-linkages-for-india-23529/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/an-estimated-model-with-macrofinancial-linkages-for-india-23529/bundle-manifest.json)

## Bibliographic details
- Authors: Magnus Saxegaard, Rahul Anand, Shanaka J Peiris
- Published: January 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451962321.001

---

### Model overview
- Develops a small open economy dynamic stochastic general-equilibrium (DSGE) model with macrofinancial linkages.
- Incorporates a financial accelerator: entrepreneurs are assumed to partially finance investment using domestic and foreign currency debt.
- Uses the model to assess the importance of financial frictions in the amplification and propagation of the effects of transitory shocks.

### Estimation approach
- Employs Bayesian estimation techniques.
- Estimation is conducted using India data.

### Key findings and uses
- The model is used to:
  - Assess the importance of the financial accelerator in India.
  - Assess the optimality of monetary policy.

### Policy implications and analysis themes
- Focuses on:
  - The role of macrofinancial linkages in open-economy settings.
  - The interaction between financial frictions and macroeconomic dynamics.
  - The assessment of optimal monetary policy in the presence of financial acceleration effects.

### Subjects and keywords (as listed)
- Subjects: Consumption, Depreciation, Exchange rates, Foreign exchange, Inflation, Labor, National accounts, Prices, Self-employment
- Keywords: acquisition cost, adjustment cost parameter, bayesian estimation, capital producer, consumer welfare, Consumption, cost adjustment cost parameter, Depreciation, Exchange rates, financial accelerator, Global, Inflation, inflation volatility, inflation-if monetary policy, macro-financial linkages, monetary policy, monetary policy shock, open economy, optimal policy, rate of depreciation, reaction function, Self-employment, WP, WPI inflation

---

## Content in this bundle

- **_wp1021**
  - [_wp1021 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp1021.pdf.md){rel="alternate" type="text/markdown"}
  - [_wp1021 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp1021.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/an-estimated-model-with-macrofinancial-linkages-for-india-23529_