A New Keynesian Model of the Armenian Economy

ByAra Stepanyan, Era Dabla-Norris, Ashot Anatolii Mkrtchyan

March 1, 2009

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 develops a small open economy dynamic stochastic general equilibrium (DSGE) model of the Armenian economy. The structure of the model is largely motivated by recent developments in DSGE modeling, with key extensions to incorporate specific structural characteristics of the Armenian economy. The resultant model can be used to simulate monetary policy paths and help analyze the robustness of policy conclusions. The paper tests the model’s properties on Armenian data, demonstrating that the main stylized features relevant for monetary policy making are well captured by the model.

Subject: Consumption, Exchange rates, Financial services, Foreign exchange, Inflation, National accounts, Prices, Real exchange rates, Real interest rates, Remittances

Keywords: Armenia, business cycle, Consumption, exchange rate appreciation, Exchange rates, Global, goods price, home goods inflation equation, Inflation, Inflation Targeting, interest rate, Macroeconomic Models, Monetary Transmission Mechanism, open economy, output-inflation tradeoff, price level, Real exchange rates, Real interest rates, WP

Pages:
43
Volume:
2009
DOI:
https://doi.org/10.5089/9781451872132.001
Issue:
066
Series:
Working Paper No. 2009/066
Stock No:
WPIEA2009066
ISBN:
9781451872132
ISSN:
1018-5941

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