In most developing countries, poverty is more widespread and severe in rural than in urban areas. The author reviews some important aspects of rural poverty and draws key implications for public policy. He presents a policy framework for reducing poverty, taking into account the functional...

KEY ISSUES Context. Macroeconomic performance has generally exceeded expectations. Real GDP grew 7.3 percent for 2013, up from 6.3 percent in 2012. Inflation declined to below 5 percent, and the external current account balance has improved. Private credit growth has been slow, however, a number...

EXECUTIVE SUMMARY The first chapter on monetary policy transmission examines the channels through which innovations to policy variables—policy rate or monetary aggregates—affect such macroeconomic variables as output and inflation in Sri Lanka. The effectiveness of monetary policy...

In this paper we examine the channels through which innovations to policy variables— policy rates or monetary aggregates—affect such macroeconomic variables as output and inflation in Sri Lanka. The effectiveness of monetary policy instruments is judged through the prism of...

EXECUTIVE SUMMARY Context. Sri Lanka’s economy has navigated recent market turbulence relatively well. Growth has remained solid, inflation is in mid-single digits, and the current account deficit has narrowed. From mid-May, the exchange rate came under pressure as market expectations of...

EXECUTIVE SUMMARY Sri Lanka’s 2009 Stand-By Arrangement was initiated at the onset of the global financial crisis. It also coincided with the ending of the country’s decades-old civil conflict. This unusual combination of circumstances made the program subject to very high economic...

In this paper we present various techniques to estimate Sri Lanka’s potential output and output gap, including statistical and model-based approaches. Compared to conventional statistical filters that rely exclusively on information in a single series, the model-based approaches allow...