Practical Model-Based Monetary Policy Analysis: A How-To Guide
Electronic Access:
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Summary:
This paper provides a how-to guide to model-based forecasting and monetary policy analysis. It describes a simple structural model, along the lines of those in use in a number of central banks. This workhorse model consists of an aggregate demand (or IS) curve, a price-setting (or Phillips) curve, a version of the uncovered interest parity condition, and a monetary policy reaction function. The paper discusses how to parameterize the model and use it for forecasting and policy analysis, illustrating with an application to Canada. It also introduces a set of useful software tools for conducting a model-consistent forecast.
Series:
Working Paper No. 2006/081
Subject:
Exchange rates Foreign exchange Inflation Oil prices Output gap Prices Production Real exchange rates
English
Publication Date:
March 1, 2006
ISBN/ISSN:
9781451863413/1018-5941
Stock No:
WPIEA2006081
Pages:
69
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