Quarterly Projection Model for Vietnam: A Hybrid Approach for Monetary Policy Implementation

IMF Working Papers, June 24, 2022

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Newly developed Quarterly Projection Model (QPM) for Vietnam; an extended version of the canonical New Keynesian semi-structural model.
Accounts for Vietnam-specific factors, including a hybrid monetary policy framework.
Calibrated model embeds a theoretically consistent monetary transmission mechanism.
Demonstrates robust in-sample forecasting accuracy, supporting richer analysis and forecast-based narratives for a forward-looking monetary policy regime.
Publication date: June 24, 2022.
Authors: Natan P. Epstein, Lucyna Gornicka, Nga Ha, Karel Musil, Valeriu Nalban.

Extension of the canonical New Keynesian semi-structural model tailored to Vietnam.
Hybrid monetary policy framework explicitly modeled.
Incorporates a theoretically consistent monetary transmission mechanism.

Interest rates.
Indicative nominal credit growth guidance.
Exchange rate interventions.
All instruments are modeled as those the authorities employ to meet the primary objective of price stability.

Calibrated model demonstrates robust in-sample forecasting accuracy.
Designed to support richer analysis and forecast-based narratives crucial for a forward-looking monetary policy regime.

Subjects: Exchange rate adjustments; Exchange rates; Foreign exchange; Inflation; Nominal effective exchange rate; Prices; Real exchange rates.
Keywords: Exchange rate adjustments; Exchange rates; Forecasting and Policy Analysis; forward-looking monetary policy regime; Global; impulse response; Inflation; Monetary Policy; monetary policy implementation; Nominal effective exchange rate; projection model; Quarterly Projection Model; Real exchange rates; sample forecasting accuracy; Transmission Mechanism; Vietnam.