## Inflation in Tajikistan: Forecasting Analysis and Monetary Policy Challenges

_IMF Working Papers, January 1, 2010_

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## Bibliographic details
- Authors: Svetlana Vtyurina, Fahad Alturki
- Published: January 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451962178.001

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### Summary
- This paper attempts to explain short- and long-term dynamics of-and forecast-inflation in Tajikistan using the Vector Error Correction Model (VECM) and Autoregressive Moving Average Model (ARMA).
- By analyzing different transmission channels through the VECM, the authors evaluate their relative dominance, magnitude, and speed of transition to the equilibrium price level.
- The analysis aims to identify policy tools that will enhance the effectiveness of monetary policy in Tajikistan.

### Methodology and Analytical Approach
- Models used:
  - Vector Error Correction Model (VECM)
  - Autoregressive Moving Average Model (ARMA)
- Analysis focus:
  - Different transmission channels to assess dominance, magnitude, and speed of adjustment to equilibrium prices.
  - Dynamic analysis of exchange rate and international inflation effects on local prices.

### Key Findings and Results
- Excess supply of broad money is inflationary in both the short and long term.
- The exchange rate and international inflation have a strong impact on local prices.
- Available monetary instruments, such as the refinancing rate, have proven to be ineffective.

### Policy Recommendations and Implications
- The Tajik monetary authority could greatly benefit from enhancing its monetary instruments toolkit.
- Specifically recommended: develop the interest rate channel to improve monetary policy execution and achieve stable inflationary conditions.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-in-tajikistan-forecasting-analysis-and-monetary-policy-challenges-23530_