Practical Model-Based Monetary Policy Analysis A How-To Guide

This paper provides a how-to guide to model-based forecasting and monetary policy analysis. It describes a simple structural model, along the lines of those in use in a number of central banks. This workhorse model consists of an aggregate demand (or IS) curve, a price-setting (or Phillips) curve, a...

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Bibliographic Details
Main Author: Laxton, Douglas
Other Authors: Berg, Andrew, Karam, Philippe
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2006
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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653 |a Energy: Demand and Supply 
653 |a Inflation 
653 |a Oil prices 
653 |a Output gap 
653 |a Currency; Foreign exchange 
653 |a Computational Techniques 
653 |a Deflation 
653 |a Production 
653 |a Production; Economic theory 
653 |a Model Construction and Estimation 
653 |a Macroeconomics: Production 
653 |a Money and Interest Rates: Forecasting and Simulation 
653 |a Price Level 
653 |a Foreign Exchange 
653 |a Prices 
653 |a Macroeconomics 
653 |a Real exchange rates 
653 |a Exchange rates 
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700 1 |a Karam, Philippe 
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520 |a This paper provides a how-to guide to model-based forecasting and monetary policy analysis. It describes a simple structural model, along the lines of those in use in a number of central banks. This workhorse model consists of an aggregate demand (or IS) curve, a price-setting (or Phillips) curve, a version of the uncovered interest parity condition, and a monetary policy reaction function. The paper discusses how to parameterize the model and use it for forecasting and policy analysis, illustrating with an application to Canada. It also introduces a set of useful software tools for conducting a model-consistent forecast