Iceland: Selected Issues

August 8, 2006

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Format: Chicago

Iceland: Selected Issues, (USA: International Monetary Fund, 2006) accessed November 22, 2024

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.

Subject: Banking, Credit risk, Financial institutions, Financial regulation and supervision, Fiscal policy, Inflation, Loans, Output gap, Prices, Stocks

Keywords: Countercyclical fiscal policy, CR, Credit risk, Global, Icelandic bank, Inflation, Inflation-output variability trade-off, ISCR, Loans, Output-inflation variability tradeoff, Reaction function, Stocks

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2006/297
Stock No:

1ISLEA2006002
ISBN:

9781451819335
ISSN:

1934-7685

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