Iceland: Selected Issues
Electronic Access:
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Summary:
Given its small size and openness, the Icelandic economy has been subject to large shocks. Systematic coordination of monetary and fiscal policy, however, could help improve the inflation-output variability trade-off. The fiscal rule is designed to simultaneously ensure a consistently countercyclical fiscal stance and achieve a stable public debt target. The parameter values of the model are estimated from the quarterly data using a Bayesian technique. To assess how the introduction of the fiscal policy changes the inflation-output variability trade-off in Iceland, the paper compares the efficiency policy frontiers.
Series:
Country Report No. 2006/297
Subject:
Banking Credit risk Financial institutions Financial regulation and supervision Fiscal policy Inflation Loans Output gap Prices Stocks
English
Publication Date:
August 8, 2006
ISBN/ISSN:
9781451819335/1934-7685
Stock No:
1ISLEA2006002
Pages:
46
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