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

Author/Editor:

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

Publication Date:

June 24, 2022

Electronic Access:

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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.

Series:

Working Paper No. 2022/125

Subject:

Frequency:

regular

English

Publication Date:

June 24, 2022

ISBN/ISSN:

9798400212536/1018-5941

Stock No:

WPIEA2022125

Pages:

36

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