Stabilizing Inflation in Iceland

 
Author/Editor: Honjo, Keiko ; Hunt, Ben
 
Publication Date: November 01, 2006
 
Electronic Access: Free Full text (PDF file size is 563KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper provides some empirical estimates on how tightly is it feasible to control inflation in a very small open economy such as Iceland. Estimated macroeconomic models of Canada, Iceland, New Zealand, the United Kingdom, and the United States are used to derive efficient monetary policy frontiers that trace out the locus of the lowest combinations of inflation and output variability that are achievable under a range of alternative monetary policy rules. These frontiers illustrate that inflation stabilization is more challenging in Iceland than in other industrial countries primarily because of the relative magnitudes of the economic shocks.
 
Series: Working Paper No. 06/262
Subject(s): Inflation | Iceland | Monetary policy | Economic stabilization | Economic models

Author's Keyword(s): Efficient policy frontier | monetary policy rules | inflation-output variability tradeoff | policy coordination
 
English
Publication Date: November 01, 2006
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2006262 Pages: 35
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org