{
  "title": "An Open Economy Quarterly Projection Model for Sri Lanka",
  "publication": "IMF Working Papers, June 25, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/06/25/an-open-economy-quarterly-projection-model-for-sri-lanka-45984",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2018/06/25/an-open-economy-quarterly-projection-model-for-sri-lanka-45984",
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  "summary": "This study documents a semi-structural model developed for Sri Lanka. This model, extended with a fiscal sector block, is expected to serve as a core forecasting model in the process of the Central Bank of Sri Lanka’s move towards flexible inflation targeting.",
  "sections": [
    {
      "heading": "Model overview",
      "content": "- Documents a semi-structural model developed for Sri Lanka.\n- Extended with a fiscal sector block to serve as a core forecasting model in the Central Bank of Sri Lanka’s move towards flexible inflation targeting.\n- Gap model that allows for simultaneous identification of business cycle position and long-term equilibrium.\n- Includes forward-looking endogenous interest rate and foreign exchange rate policy rules allowing for flexible change in policy behavior."
    },
    {
      "heading": "Estimation and calibration",
      "content": "- Model was first calibrated.\n- Data-fit was improved using Bayesian estimation technique with relatively tight priors."
    },
    {
      "heading": "Intended use and policy relevance",
      "content": "- Expected to serve as a core forecasting model supporting the transition to flexible inflation targeting.\n- Supports analysis of monetary policy through:\n  - Forward-looking endogenous nominal interest rate rule.\n  - Forward-looking endogenous foreign exchange rate policy rule.\n- Facilitates identification of excess demand and output gap dynamics in an open economy setting."
    },
    {
      "heading": "Key thematic coverage (as stated in source)",
      "content": "- Economic forecasting\n- Exchange rates; Foreign exchange\n- Inflation; Inflation targeting; Inflation expectation; Headline inflation; Sri Lankan inflation\n- Monetary policy; Nominal interest rate\n- Output gap; Prices; Real exchange rates\n- Administered energy inflation; Energy inflation; Transport inflation; World oil price dynamics\n- Forecasting and Policy Analysis System; Flexible Inflation Targeting; Quarterly Projection Model; Open economy; Sri Lankan economy\n\nSource: An Open Economy Quarterly Projection Model for Sri Lanka (IMF Working Papers).\n\n---\n\n Content in this bundle\n\n- An Open Economy Quarterly Projection Model for Sri Lanka, WP/18/149, June 2018\n  - An Open Economy Quarterly Projection Model for Sri Lanka, WP/18/149, June 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - An Open Economy Quarterly Projection Model for Sri Lanka, WP/18/149, June 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/06/25/an-open-economy-quarterly-projection-model-for-sri-lanka-45984"
    }
  ],
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    "[Markdown version](/en/publications/wp/issues/2018/06/25/an-open-economy-quarterly-projection-model-for-sri-lanka-45984/index.md)",
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    "[Bundle manifest](/en/publications/wp/issues/2018/06/25/an-open-economy-quarterly-projection-model-for-sri-lanka-45984/bundle-manifest.json)",
    "Authors: Chandranath Amarasekara, Rahul Anand, Kithsiri Ehelepola, Hemantha Ekanayake, Vishuddhi Jayawickrema, Sujeetha Jegajeevan, Csaba Kober, Tharindi Nugawela, Sergey Plotnikov, Adam Remo, Poongothai Venuganan, Rasika Yatigammana",
    "Published: June 25, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484361511.001",
    "Documents a semi-structural model developed for Sri Lanka.",
    "Extended with a fiscal sector block to serve as a core forecasting model in the Central Bank of Sri Lanka’s move towards flexible inflation targeting.",
    "Gap model that allows for simultaneous identification of business cycle position and long-term equilibrium.",
    "Includes forward-looking endogenous interest rate and foreign exchange rate policy rules allowing for flexible change in policy behavior.",
    "Model was first calibrated.",
    "Data-fit was improved using Bayesian estimation technique with relatively tight priors.",
    "Expected to serve as a core forecasting model supporting the transition to flexible inflation targeting.",
    "Supports analysis of monetary policy through:",
    "Facilitates identification of excess demand and output gap dynamics in an open economy setting.",
    "Economic forecasting",
    "Exchange rates; Foreign exchange",
    "Inflation; Inflation targeting; Inflation expectation; Headline inflation; Sri Lankan inflation",
    "Monetary policy; Nominal interest rate",
    "Output gap; Prices; Real exchange rates",
    "Administered energy inflation; Energy inflation; Transport inflation; World oil price dynamics",
    "Forecasting and Policy Analysis System; Flexible Inflation Targeting; Quarterly Projection Model; Open economy; Sri Lankan economy",
    "**An Open Economy Quarterly Projection Model for Sri Lanka, WP/18/149, June 2018**"
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