This paper presents a simple structural model of inflation adapted for Nigeria based on the methodology of Berg, Karam, and Laxton. This approach allows different policy options to be considered systematically in a baseline forecasting exercise. The development and calibration of this model are...

This Selected Issues paper discusses Romania’s modeling monetary policy. A simple Forecasting and Policy Analysis System (FPAS) for Romania has been designed to help in the preparation of the IMF staff’s forecasts and policy assessments. A major advantage of this approach is that...

This paper explores the role of exchange rates in emerging economies with inflation-targeting regimes, an issue that has become especially germane during the current episode of financial turmoil and volatile capital flows. Under inflation targeting, the interest rate is the main monetary policy...

This 2003 Article IV Consultation highlights that the South African economy performed well in 2002, notwithstanding difficult global economic conditions. Supported by sound macroeconomic management and a highly competitive exchange rate, real GDP growth rose to 3.0 percent in 2002 from 2.8...

The analysis in this paper suggests that the large fiscal deficits that Pakistan has experienced over most of the period since 1970 led to some crowding out of private investment, resulting in slower output growth than would otherwise have been observed. Past fiscal deficits have also resulted...

Under a flexible inflation targeting regime, should policymakers avoid any reaction to movements in the foreign exchange market? Using data for six advanced open economies explicitly targeting inflation, the paper examines empirically whether real exchange rate disequilibria systematically...

This paper shows that the response of inflation to external shocks is very different when the authorities target the real exchange rate than when they follow a fixed exchange rate or a preannounced crawling peg. Specifically, shocks that would have no effect on the steady-state inflation rate...

This paper presents a comprehensive econometric analysis of the determinants of deflation in Hong Kong SAR. The analysis helps to determine the relative contributions of factors such as increased productivity, scarce money supply, and excess capacity in determining deflation. The main conclusion...

This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real...

This paper proposes a markedly different transmission mechanism from monetary policy to the macroeconomy, focusing on how policy changes nominal inertia in the Phillips curve. Using recent theoretical developments, we examine the properties of a small, estimated U.S. monetary model...