Morocco: A Practical Approach to Monetary Policy Analysis in a Country with Capital Controls
IMF Working Papers, February 14, 2018
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- Morocco: A Practical Approach to Monetary Policy Analysis in a Country with Capital Controls
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Bibliographic details
- Authors: Mokhtar Benlamine, Meryem Farouki, Ágnes Horváth, Faical Hossaini, Hasnae El Idrissi, Zineb Iraoui, Mihály Kovács, Douglas Laxton, Anass Maaroufi, Katalin Szilágyi, Mohamed Taamouti, David Vávra
- Published: February 14, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484341810.001
Executive summary
- The Central Bank of Morocco has been developing a Forecasting and Policy Analysis System (FPAS) to support a gradual move toward a more flexible exchange rate regime and the eventual adoption of a full-fledged inflation-targeting (IT) regime.
- At the center of the FPAS is a quarterly projection model tailored for two different types of exchange rate regimes:
- A fixed exchange rate model version to be used during the pre-IT period.
- A flexible exchange rate model version to prepare alternative scenarios for monetary policy decision makers to discuss the potential policy implications of shocks under an IT regime.
Key findings and model features
- The FPAS uses a quarterly projection model designed specifically for Morocco’s policy transition from a conventional peg toward exchange rate flexibility and IT.
- Model applications:
- Fixed exchange rate model: operational during pre-IT period.
- Flexible exchange rate model: used to simulate alternative scenarios under an IT regime and to analyze policy implications of shocks.
- The system is intended to support gradual institutional and operational changes at the Central Bank of Morocco as it moves toward IT.
Policy analysis and applications
- Purpose:
- To inform monetary policy decision makers by providing alternative scenarios and shock analysis under different exchange rate regimes.
- Central capabilities:
- Forecasting and policy simulation across regime versions (fixed and flexible).
- Analysis of transmission mechanism elements referenced in keywords: BAM policy rate, interest rate, money-market interest rate differential, inflation aversion.
Subjects and keywords (as provided)
- Subject: Conventional peg, Exchange rate arrangements, Exchange rate flexibility, Exchange rates, Foreign exchange, Inflation, Prices
- Keywords: BAM policy rate, Conventional peg, Exchange rate arrangements, Exchange rate flexibility, Exchange rates, forecasting and simulation, Global, Inflation, inflation aversion, interest rate, model construction, model economy, monetary policy, money-market interest rate differential, transmission mechanism, version of the MQPM, WP