Macroeconomic modeling for optimal stabilization policy in Mongolia

Gan-Ochir Doojav ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops three macroeconomic models such as large structural VAR, DSGE-based structural VAR and GAP models for Mongolia, a developing and commodity-exporting economy. All models are estimated using Bayesian methods on the quarterly data. Results suggest that (i) external shocks (i.e., China’s economic activity, commodity prices and FDI) are important sources of macroeconomic volatility in Mongolia, (ii) combining macroprudential and monetary policy measures is important in welfare loss by ensuring both macroeconomic and financial stability, and (iii) equilibrium values for inflation, growth, unemployment rate and real interest rate are estimated as 6 percent, 5 percent, 8 percent, and 3.5 percent for Mongolia, respectively. The paper also provides recommendations for macroeconomic stabilization policy.

Keywords: External shocks; Open economy macroeconomics; Optimal stabilization policy; Bayesian analysis (search for similar items in EconPapers)
JEL-codes: C11 C32 C51 E58 E63 F4 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-cba and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:111206

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