Dynamic Responses to Policy and Exogenous Shocks in an Empirical Developing-Country Model with Rational Expectations

Publication Date:

March 1, 1990

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:

The dynamic responses of a developing economy to a variety of policy and external shocks are studied using an empirical macroeconomic model which embodies rational expectations, perfect capital mobility, and import rationing. These features, which are relatively new in developing-country modelling, prove to be quite important in determining the model’s dynamic properties. This suggests that macroeconomic management in developing countries--such as that involved in short-run stabilization--requires that such features be explicitly taken into account.

Series:

Working Paper No. 1990/025

Subject:

Expenditure Import quotas Inflation Real interest rates Stocks

English

Publication Date:

March 1, 1990

ISBN/ISSN:

9781451920741/1018-5941

Stock No:

WPIEA0251990

Pages:

54

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