Quarterly Projection Model for Vietnam: A Hybrid Approach for Monetary Policy Implementation

By Natan P. Epstein, Lucyna Gornicka, Nga Ha, Karel Musil, Valeriu Nalban

June 24, 2022

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Natan P. Epstein, Lucyna Gornicka, Nga Ha, Karel Musil, and Valeriu Nalban. Quarterly Projection Model for Vietnam: A Hybrid Approach for Monetary Policy Implementation, (USA: International Monetary Fund, 2022) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We present a newly developed Quarterly Projection Model (QPM) for Vietnam. This QPM represents an extended version of the canonical New Keynesian semi-structural model, accounting for Vietnam-specific factors, including a hybrid monetary policy framework. The model incorporates the array of policy instruments, specifically interest rates, indicative nominal credit growth guidance, and exchange rate interventions, that the authorities employ to meet the primary objective of price stability. The calibrated model embeds a theoretically consistent monetary transmission mechanism and demonstrates robust in-sample forecasting accuracy, both of which are important prerequisites for the richer analysis and forecast-based narratives that support a forward-looking monetary policy regime.

Subject: Exchange rate adjustments, Exchange rates, Foreign exchange, Inflation, Nominal effective exchange rate, Prices, Real exchange rates

Keywords: Exchange rate adjustments, Exchange rates, Forecasting and Policy Analysis, Forward-looking monetary policy regime, Global, Impulse response, Inflation, Monetary Policy, Monetary policy implementation, Nominal effective exchange rate, Projection model, Quarterly Projection Model, Real exchange rates, Sample forecasting accuracy, Transmission Mechanism, Vietnam

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/125
Stock No:

WPIEA2022125
ISBN:

9798400212536
ISSN:

1018-5941

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