A Practical Model-Based Approach to Monetary Policy Analysis

A Practical Model-Based Approach to Monetary Policy Analysis—Overview

By Douglas Laxton, Andrew Berg, Philippe D Karam

March 1, 2006

Preview Citation

Format: Chicago

Douglas Laxton, Andrew Berg, and Philippe D Karam. A Practical Model-Based Approach to Monetary Policy Analysis—Overview, (USA: International Monetary Fund, 2006) accessed November 21, 2024

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 motivates and describes an approach to forecasting and monetary policy analysis based on the use of a simple structural macroeconomic model, along the lines of those in use in a number of central banks. It contrasts this approach with financial programming and its emphasis on monetary aggregates, as well as with more econometrically driven analyses. It presents illustrative results from an application to Canada. A companion paper provides a more detailed how-to guide and introduces a set of tools designed to facilitate this approach.

Subject: Exchange rates, Inflation, Output gap, Real exchange rates, Real interest rates

Keywords: Exchange rate, Interest rate, WP

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/080
Stock No:

WPIEA2006080
ISBN:

9781451863406
ISSN:

1018-5941

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