Practical Model-Based Monetary Policy Analysis--A How-To Guide

Philippe D Karam, Douglas Laxton and Andrew Gouinlock Berg ()

No 06/81, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Monetary policy; Canada; United States; Monetary aggregates; Forecasting models; Economic models (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac and nep-mon
Date: 2006-04-10
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